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The Ostium Vault is the onchain settlement layer for every position traded on the protocol. LPs deposit USDC, receive tokens, and earn yield from protocol opening fees. OLP capital sits in the senior loss position, protected by a buffer that absorbs trader PnL first, and also functions as working capital for the settlement system.

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Two Pools of USDC

The vault smart contract holds two distinct pools:
  • OLP capital. Deposited by LPs in exchange for OLP tokens. This is the senior tranche.
  • Buffer capital. Dedicated capital posted by Ostium Labs and strategic partners. This is the junior tranche.
Losses flow in a strict order. The buffer absorbs them first, in full. Only once the buffer is entirely depleted can a loss touch OLP capital. In structured-credit terms, OLP is the senior tranche and the buffer is the equity tranche beneath it. The same architecture is used in collateralized loan obligations (CLOs), securitized credit deals, and clearinghouse default waterfalls. Across a normal trading day:
  • When traders net win, the vault pays them. The buffer shrinks onchain during the day, then is replenished at daily settlement from the mirror hedge’s matching gain offchain.
  • When traders net lose, the vault retains their losses. The buffer grows onchain, then sends the excess offchain at settlement to keep the hedging book funded.
OLP is unaffected in both directions until the buffer is gone.
OLP capital is the last pool of money to take a loss in the system. The only way OLP takes a loss is if the entire buffer is wiped out first.

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OLP as Working Capital

The same structure that protects OLP also places it at the center of intraday cash flow. When a trader closes a winning position, the vault pays them in USDC immediately from onchain capital. The mechanics:
  1. A trader closes a winning position. The vault pays out onchain, immediately.
  2. The trade was mirrored offchain at open through Jump Trading, Ostium’s flagship hedging partner. The offchain hedge has an equal and opposite gain. Net-net, the protocol is flat.
  3. USDC in the vault goes down. USDC in the offchain hedging book goes up by the same amount.
  4. Once per day, a settlement run moves USDC between the two books to restore the buffer onchain to its target size.
Total USDC sitting in the vault smart contract will fluctuate throughout the day as trades open and close. That movement is operational, not a loss. OLP capital is effectively lending to the settlement system in the intraday window, then being restored at daily settlement. The closest traditional-finance analog is a money market fund. Investor cash is actively deployed into short-term instruments during the day; the fund’s share price only updates at a set time. The deployment itself is not the risk. The risk lives in what the cash is deployed into. For OLP, that “what” is the protocol’s settlement obligations, which are backed by the buffer taking losses first.

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What You’ll See in the UI

Intraday vault USDC fluctuation. The total USDC sitting in the vault smart contract will swing up and down throughout the day. This reflects trade settlement, not PnL accrual. OLP price updates once per day. OLP price recomputes only after the daily settlement run. Your share of the vault does not move intraday based on USDC flows. It moves once per day, based on the net result of fees earned. Buffer health. The protocol surfaces a buffer metric that indicates how much junior capital sits between trader PnL and your OLP capital. Under-collateralized state (UC). If the buffer is fully depleted and additional losses begin drawing on OLP, the vault enters UC state and automatically blocks new deposits. This is an accounting measure: deposits during a pending loss would create share-pricing ambiguity. Ostium Labs’ operational priority in UC is to restore the buffer and return the vault to normal state. OLP price will reflect any realized loss at the next daily settlement.
If the vault’s onchain USDC balance swings intraday, or briefly drops below the total OLP notional, that is normal settlement activity. OLP price is what matters for your share’s value, and it only recomputes after each daily settlement.

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How LPs Earn

Post-upgrade, OLP yield has a single source: opening fees. 
OLP APR = (Opening fees paid to OLP per year) / (Outstanding OLP shares)
Every trade opened on Ostium pays an opening fee, and a fixed share of that fee flows to OLP holders. There are no rollover fees accruing to OLP, no share of trader PnL, and no conditional state-based accrual. The opening-fee allocation to OLP is a protocol parameter tuned to produce a stable, predictable yield. It is periodically reviewed and can be recalibrated if realized APR drifts. Live and historical APR are published on the Dune dashboard.
Pre-upgrade, OLP APR ranged from approximately -4% to +50% depending on trader PnL and vault state. That range reflects the old mechanics (OLP as junior counterparty) and no longer applies. The post-upgrade design produces a tighter, more stable range.

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TVL vs. Vault USDC

These are two different numbers, and they will often disagree. TVL is OLP price × outstanding OLP shares: the value of LPs’ claim on the vault. Total vault USDC is every USDC sitting in the vault smart contract, including OLP capital, buffer capital, and any intraday settlement flow in motion. Total vault USDC will almost always be larger than TVL because it includes the buffer. Dashboards showing “USDC in the vault contract” will therefore read higher than the OLP TVL figure. That gap is the buffer.

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FAQ

OLP holds the senior loss position in the protocol. A dedicated buffer of junior capital absorbs trader PnL first, in full, before any loss can reach your OLP capital. OLP deposits are not insured. An extreme event that fully depletes the buffer would cause OLP to take a loss.
The vault is the instant-settlement layer for every trade on Ostium. When traders close winning positions, the vault pays them out immediately onchain. Those flows are mirrored by offchain hedges, so the protocol stays balanced. Only the location of the USDC changes intraday. Once per day, a settlement run moves USDC between the two books to restore the buffer to its target size. OLP price only updates after settlement, so intraday USDC movement does not affect your share’s value.
Opening fees paid to OLP, divided by outstanding OLP shares, annualized. No rollover fees, no share of trader PnL, no conditional state-based accrual. The fee allocation is a tunable protocol parameter. Live and historical APR are published on the Dune dashboard.
The buffer is dedicated capital that sits in the vault smart contract alongside OLP capital, posted by Ostium Labs and strategic partners. It is the junior tranche: it takes trader PnL first, in full, before any loss touches OLP. The buffer is rebalanced onchain during daily settlement to keep its size close to a target level appropriate for expected daily PnL swings.
UC state means the buffer has been fully depleted and additional losses are drawing on OLP capital. When this happens, the vault automatically blocks new deposits for accounting reasons: deposits during a pending loss state would create share-pricing ambiguity. Ostium’s operational priority in UC is to restore the buffer and return the vault to normal state.
Your OLP balance appears in your wallet. Multiply by the current OLP price (visible in the app or via the Dune dashboard) to see your USDC-equivalent value. Historical OLP price, buffer health, TVL, and APR are all published on the Dune dashboard.
  • How to Deposit — Step-by-step for depositing USDC and receiving OLP.
  • OLP Token — Deeper detail on OLP pricing, share mechanics, and yield.
  • How to Withdraw — Withdrawal windows and timing.