# Perps Vault & Yield

#### The Perpetual Vault Mechanism

The Perps Vault is the central component of our liquidity ecosystem, designed to be the counterparty for most trades and provide the liquidity backbone for our orderbooks.

* Purpose: The Vault uses market-making strategies to profit from trading activity, thereby earning revenue for its liquidity providers (LPs).
* Revenue Streams: The Vault generates income from:
  1. Funding Rates: Earning the funding rate differential on positions it counter-parties.
  2. Trading Fees: Receiving 30% of all trading fees generated on the platform.

#### Earning XPL and Points

LPs who deposit USDT into the Perpetual Vault are rewarded via a transparent, pro-rata distribution system:

1. XPL Rewards: All proceeds generated by the Vault (from funding and trading fees) are used to perform a market buy of the native token, XPL. This XPL is then distributed proportionally to all liquidity providers. This mechanism constantly links yield to platform usage and creates continuous buying pressure on the token.
2. Points System: LPs also earn Points. These points are designed to reward long-term commitment and will be redeemable for PlasmaPerps governance or utility tokens in the future.


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