Protocol Technical Description

Social trade's core contracts have a simple structure: A factory contract is responsible for creating Trading Vaults for traders where they will be able to trade users’ deposits. After a deposit is made, the user receives an equivalent amount of shares corresponding to an ERC-20 contract which acts as a proof of deposit. The vault also tracks the performance of the trader through the shares and manages fees redistribution. TVL and shares are calculated by Pyth Network oracle.

Trading Vault

Social Trade introduces the concept of Trading Vault which is a contract that enables the trader to interact with the decentralized Perpetual Protocol gTrade (https://gains.trade/) or interact with 1inch for spot vault.

From the user’s perspective, following someone corresponds to making a deposit in a vault. The owner of the vault can then trade with the vault’s funds as he would trade using his wallet on gTrade.

There are two different types of vaults: PERP vaults and SPOT vaults.

PERP Vaults

PERP vaults operate through integration of gTrade ((https://gains.trade/) ) on Base Blockchain.

You have access to all tokens listed by gTrade on the BASE blockchain When a trade is in progress in a PERP Vault

In the event that a trade is in progress, an investor cannot deposit funds directly, but can program a automatic deposit. The trader will then deposit the user's funds once all trades are closed.

In a PERP vault, funds are always deposited and withdrawn in USDC.

When are performance fees collected?

At the close of a positive trade. Then a portion of the NET P&L accruing to the investors is deducted for the trader and the protocol. This is the perfomance fee.

SPOT Vaults

Spot vaults operate through integration of 1inch. The spot vault gives you access to all the tokens on the blockchain BASE, it's totally permisionless. You can enter any token contract, all tradable on the blockchain base, in order to find the best tokens.

When a trade is in progress in a PERP Vault

Unlike Perp vaults, deposits and withdrawals in a Spot vault are always instant. When depositing USDC, an investor receives their share of the vault immediately, allowing the trader to start trading with the funds without delay. Similarly, during withdrawal, the investor receives their funds directly.

When an investor withdraws their share from the vault, they will receive a portion of all the assets held by the vault.

Example: Suppose the trader holds 50% of the vault's funds in BTC and 50% in ETH, and the investor has deposited USDC to acquire a 10% share of the vault. When the investor withdraws their 10%, they will receive in their wallet 50% in BTC and 50% in ETH. The investor makes a deposit in USDC, and the investor receives shares for his USDC up to the value of the vault. USDC are added to the vault, and the trader can trade with them.

How and When are performance fees collected?

This is the high water mark principle. The investor enters at a fixed share price. Thisis the high water mark principle (as soon as the share price is higher than the entry price of the share at the time of investment), the trader has the option of claiming his fees manually. Exemple : Let's imagine that the vault share price is $7. If the share price rises to $7.1 (i.e. above it), the trader will be able to claim, and the next time you want to claim, you'll have to go above $7.1 again. the share price falls, so he loses money. If he came in with $1,000 at a share price of $1, he'd have 1,000 shares. If tvl falls and the share price rises to $0.8, his 1,000 shares would be worth $800. Nothing to claim. if share prices rise above $1, e.g. $1.1, the trader can claim his perfs fees. The new high water mark will be $1.1 for this investor, and the share price will have to rise above $1.1 for the trader to be able to claim perfs again on this investor.