How it works
Vaults
A vault is an auto-compounding wrapper around a liquidity position. Deposit, hold a share token, and let it grow — here's exactly what that means.
The share token#
When you deposit, the vault mints you a share token— a standard ERC-20 that lives in your wallet and represents your slice of everything the vault holds. You don't get a receipt or an IOU; the share token is your position. Transfer it and you transfer the position with it.
The vault's total holdings are split across all shares. As the strategy earns trading fees and TOPAZ rewards and compounds them back in, the pool of underlying tokens grows while the number of shares stays the same — so each share is worth progressively more. That per-share value is the share price (sometimes “price per share,” or PPS).
Your share count doesn't change — its value does
Two kinds of vault#
Topaz runs two vault types. They share the same idea — auto-compounding liquidity — but differ under the hood:
| CL — Concentrated Liquidity | V2 — LP | |
|---|---|---|
| Liquidity type | A managed price range (Slipstream) | Full-range LP pair |
| Underlying | Two pool tokens (token0 / token1) | An LP token (a token pair) |
| Share token standard | ERC-20 (not ERC-4626) | ERC-4626 |
| Has a price range? | Yes — earns only while in range | No — always “in range” |
| Capital efficiency | Higher (liquidity is concentrated) | Standard |
Most of this documentation focuses on CL vaults, because that's where the interesting mechanics live (ranges, rebalancing, the calm check). V2 vaults are simpler: a standard LP that compounds, with no range to manage. The deposit experience is the same either way.
Depositing#
You can provide both of the vault's tokens, or zap in with a single token or BNB (how zapping works). When you deposit both tokens, you don't have to match the exact pool ratio — the vault takes the right proportion and returns any leftover tokento your wallet. The app previews how much of each token will actually be used and how many shares you'll receive before you confirm.
Withdrawing#
Withdrawing burns your shares and returns the underlying tokens to your wallet — your pro-rata slice of token0 and token1. You can withdraw any amount, or everything, at any time. Withdrawals are never gated or paused, so you can always exit even during volatile markets. (You can also zap out to a single token or BNB.)
Exit is always open
In range vs. out of range#
A concentrated-liquidity vault concentrates its liquidity around the current price. It only earns trading fees and emissions while the market price sits insidethat range. If the price moves far enough to exit the range, the position stops earning until it's back in range.
You don't have to babysit this: the strategy automatically re-centers the range around the price as it drifts. There can be brief out-of-range moments between adjustments, which is why each vault shows a live in-range indicator.
See how ranges and rebalancing work
What happens to value out of range#
Out of range, your position is mostly held in one of the two tokens (whichever side the price moved through). You don't lose the tokens — but the mix shifts, which is the concentrated-liquidity form of impermanent loss. The strategy's job is to keep liquidity productive while managing this.
New (unseeded) vaults#
A vault can be deployed before anyone has deposited. Until the first deposit lands it holds nothing, so metrics like TVL and share price start empty. The very first deposit also permanently locks a tiny amount of shares (a standard safeguard against a known attack on freshly created vaults) — negligible in practice, but it's why a brand-new vault's first preview looks slightly off.