(mucho) vaults

(mucho) Vaults are three vaults that allow you to deposit USDC, WETH, and WBTC tokens and earn predictable returns during the week with low risk.

The system uses several proprietary smart contracts on the Arbitrum network, which utilize these deposits to invest in various low-risk strategies. One of the main strategies is the GLP index from the GMX protocol, composed of approximately 50% stablecoins, 25% WETH, 20% WBTC, and 5% other tokens.

When you deposit USDC, WETH, or WBTC into one of the vaults, you receive in return the mUSDC, mWETH, or mWBTC token, with the current exchange rate. The value of the "m" tokens (e.g., mWBTC) relative to their "main token" (e.g., WBTC) will always increase, reflecting the APR provided by the vault.

The GMX protocol is a perpetual market that allows leveraged trading, and its GLP index provides liquidity to the market.

The GLP purchased by the (mucho) Vaults protocol with the tokens deposited in the vaults is staked in the GMX protocol, which provides a fixed weekly reward to stakers. This reward comes from GMX's earnings from trader activities (fees and liquidations), part of which is used to remunerate liquidity providers (GLP token buyers who leave it in staking).

The reward obtained from GLP staking is automatically reinvested into more GLP, allowing the protocol to have a GLP reserve that overcollateralizes the deposits made in the vaults with their investors and their returns.

Risks

The protocol has the inherent risks of depositing in smart contracts (hacks or coding errors).

Additionally, while traders tend to lose in the markets in the long run, they may temporarily win in GMX. This loss will not be reflected in the asset's price, as it is temporary, but will result in an increase in the protocol's withdrawal fees.