Vault

In traditional over-collateralization models, users typically operate individual vaults, each generating its Collateralized Debt Position (CDP). Wand, however, innovates by aggregating vaults, which harmonizes the assets minted and obviates the necessity for singular liquidations. Within this aggregated structure lies a pooled CDP that encapsulates all circulating margin tokens, with the debt acknowledged as collective. Consequently, every margin token holder assumes a proportional share of this communal debt.

Wand employs the Asset Adequacy Ratio (AAR) as a metric to gauge the health of the vault. A heightened AAR diminishes the leverage ratio applicable to margin tokens. Conversely, a diminished AAR indicates potential debt repayment risks associated with USB. Thus, maintaining the AAR balance is crucial.

In the Wand protocol, there are two types of vaults: V-Vault for volatile assets, such as ETH and WBTC, and S-Vault for stable assets, like USDC and USDB. Additional vaults can be established as the range of accepted collateral types expands.

Each vault mints the same USB, which can be used in the same scenarios, though the specific margin tokens minted by each will vary.