Contents
Contents
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Drift is excited to launch the largest platform for structured products on Solana featuring six leading ecosystem teams, over 20 innovative yield strategies with $170M+ in Total Value Locked (TVL). 

Drift Vaults provide easy access to high-yield investment strategies typically reserved for hedge funds, bringing a new level of accessibility and sophistication to DeFi users.

What are Drift Vaults?

Drift Vaults are operated on-chain by expert teams with backgrounds in hedge funds, DeFi protocols, and vault management. Leading ecosystem players like Gauntlet, Neutral Trade, Elemental, and others have built vaults on the platform, offering users a wide range of yield opportunities.

These vaults leverage Drift’s borrow/lend functions and its perpetuals exchange, enabling users to deposit assets and earn yield. 

Current APYs range from 10% to 110% (depending on the strategy) calculated based on the vault’s share price. 

How does Drift Vaults work?

  1. Deposit Assets: Users choose a vault and deposit the relevant assets.
  2. Automatically Delegated: Each vault is managed by a single delegate who executes the trading strategy on behalf of pooled funds. ‍
  3. Earn Yield: In return for liquidity, depositors earn yield. Vault profits are distributed proportionally based on the user’s share of the vault.

Key features

  • Only depositors can withdraw their funds. 
  • Vaults are fully on-chain and governed by smart contracts. 
  • Drift’s vault contract is undergoing auditing for enhanced security. 
  • You can view the vault’s strategy by clicking on ‘View Vault’ for select vaults. 

Fees

Vault managers may set custom performance fees, typically ranging from 20% to 30%.

Lock Up Period & Withdrawals

Withdrawal requests are subject to redemption periods of 1 to 7 days, ensuring smooth strategy execution. You can view the redemption period on each vault. Do note that profits during the redemption period are forfeited.

Type of Vault Strategies

The three most common vault strategies currently available are hedged JLP strategies, asset specific hJLP strategies and borrow and lend strategies. 

Hedged JLP Strategies

The Hedged JLP strategy allows users to earn yield without exposure to price volatility. 

This strategy utilizes the Jupiter Liquidity Pool (JLP) which is composed of different assets, such as BTC, ETH, SOL, USDC and USDT. The JLP token represents a share of the entire pool, and as the pool contains volatile assets such as BTC and SOL, JLP holders are exposed to this volatility indirectly. To date, JLP has performed extremely well due to the fees that the token accrues from Jupiter's perps platform. 

These vaults hedge against volatile assets like BTC, ETH, and SOL held within Jupiter Liquidity Pool (JLP), ensuring delta-neutral positions. Delta-neutral is an investment strategy that seeks to balance opposing positions to eliminate exposure to the price movement of an underlying asset. This means being simultaneously long and short on the same asset, neutralizing price risks while retaining fee income. 

Notable Vaults:

Asset Specific hJLP Strategies 

These vaults hedge only select volatile assets within JLP, allowing exposure to others. For instance, SOL Super Staking hedges BTC and ETH while keeping SOL exposure, benefiting users who expect SOL to outperform.

Notable Vaults:

Borrow and Lend Strategies

Some vaults capitalize on rate arbitrage between DeFi platforms. For example, borrowing USDC on Drift at 10% APY and lending it on Kamino for 15% APY creates a 5% profit margin. 

Notable Vaults: ‍

Funding Rates and Delta-Neutral Strategies 

Perpetual contracts track an asset’s spot price using funding rates—a fee exchanged between long and short positions:

  • Positive Rates: In an uptrend, longs pay shorts.
  • Negative Rates: In a downtrend, shorts pay longs.

Delta-neutral strategies take advantage of funding rates while avoiding price risks.

Example:
A delta-neutral vault holds assets like BTC, ETH, and SOL while simultaneously shorting them to cancel out price risks. Since funding rates are usually positive, short positions earn extra yield. This approach ensures steady earnings without worrying about price volatility.

Key Considerations & Risks

Performance Risk: Strategies can underperform based on market conditions. Research each vault’s strategy carefully.

Volatility Risk: Extreme market volatility can impact strategy effectiveness and profitability.

Counterparty Risk: Interactions with external market participants carry risks of non-fulfillment or financial loss.

To check the vault performance, learn about the fund manager and strategies, navigate to the 'Overview' tab on the specific vault page.

How to Get Started

  1. Select a vault and enter your desired deposit amount.
  2. Confirm your deposit.
  3. Sit back and watch your assets grow through the chosen strategy.

Withdrawals are just as simple: input the amount you wish to withdraw and complete the request (subject to the vault’s redemption period).

Ready to start earning? 

Deposit into a vault here.

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