The Concern: Concern 1: During market downturns, when most traders hold short positions, or long liquidations could amplify token price declines. Concern 2: The Solver requires a certain percentage of the total supply deposit into its vaults, in order to bootstrap the market. Would that mean that it potentially would be sold, which creates a negative price pressure on the Token?
The Answer: In phase 1 on average buys will be greater than sells because the solver buysback tokens from all generated revenue, additionally Vibe DOES NOT LIQUIDATE positions into the spot market. Since Vibe is OTC-based, liquidated positions are settled at current quoted prices from solvers. The profits generated from these settlements can then be used to buy the project token or be paid out directly to projects as profits.
🟣 PHASE 1: Solver and therefore LP, IS the SOLE Counterparty. 🟠 PHASE 2: Solver and therefore LP, are NOT the counterparty.
| Event | What happens (Trader side) | Effect on Token | LP Role |
|---|---|---|---|
| 📥 Trader opens position | Pays opening fees & spreads | 🟢 Positive ↑ (+1) | In both Phases: LP receives fees |
| ⏳ Trader holds position | Pays funding & borrow costs | 🟢 Phase 1: ↑ (+2) | |
| 🟢 Phase 2: ↑ (+1) | 🟣 Phase 1: LP receives funding & borrow cost | ||
| 🟠 Phase 2: LP receives borrow cost | |||
| 📉 Trader loses | Losses transfer to LP | 🟢 Phase 1: ↑ (+3) | |
| ⚪ Phase 2: → (0) | 🟣 Phase 1: LP receives USDC → buybacks or payouts | ||
| 🟠 Phase 2: Traders settle PnL with each other | |||
| 📈 Trader wins | LP pays trader profits | 🔴 Phase 1: ↓ (–3) | |
| ⚪ Phase 2: → (0) | 🟣 Phase 1: LP pays trader profits from USDC/token inventory | ||
| 🟠 Phase 2: Traders settle PnL with each other | |||
| 💀 Trader gets liquidated | Account seized; collateral sent to LPs | 🟢 Positive ↑ (+6) | In both Phases: LP receives seized collateral |
Historically in markets, especially leveraged markets, losses of traders outweigh their profits. Prominent examples of Vault-Based Crypto Perps and their historical performance see GMX, HLP and other protocols performance.
If traders lose more than they win (which is the historical average), buys already outweigh sells from day one, practically speaking buybacks will be far larger than sells, turning perps into a net positive driver for your token.
There is no "liquidation cascade" because Vibe does not actively sell tokens to fill liquidations. Instead, liquidations generate revenue that flows into buybacks. Unlike traditional platforms, during sharp downward price movements, Vibe's perpetual bid engine actually dampens market shocks rather than fueling downtrends. This happens because Vibe uses traders' losses as liquidation profits to purchase tokens instead of liquidating positions into spot markets. When the perpetual bid is activated, Vibe channels 100% of market-generated profits into token buys.
As the market goes down and longs are liquidated the perpetual bid creates positive momentum. Additionally, as the market goes up and shorts are liquidated the perpetual bid enhances positive momentum.
The perpetual market of vibe creates constant upward pressure if perpetual bid is activated.