# UltraX Arb Vault V2 ### Overview Following the exploit on the Perp DEX Drift, which affected around 25% of positions on the UltraX Legacy version, Vectis has completed a vault restructuring and deployed the **UltraX Arb Vault V2**. Similar to its predecessor, **UltraX Arb Vault** V2 is engineered to capture funding rate and basis arbitrage opportunities across multiple venues, moving beyond the constraints of a single exchange or fixed trading pairs. By dynamically allocating capital across **Hyperliquid, Binance**, **Aster and Lighter,** the vault significantly expands its opportunity set, remaining productive even when spreads on a specific venue compress. Based on our proven logic, we have significantly upgraded the vault’s architecture: we optimized liquidity by concentrating 90%+ of assets within the Binance + Hyperliquid corridor for superior depth, integrated Ceffu and Cobo for institutional-grade custody and asset segregation, and hardened protocol security through a 3/5 multi-sig upgrade and an 8-hour timelock to neutralize governance and execution risks. The vault operates in a market-neutral configuration, focusing on funding and basis capture rather than directional price exposure. All positions, balances, and routing logic are fully observable on perp DEXs, offering a transparent and verifiable alternative to opaque, CEX-based arbitrage funds. ### Core Strategy Design #### **Arbitrage Trading** As the number of perpetual DEXs continues to grow, market inefficiencies frequently emerge across venues. Many traditional market makers and arbitrageurs are still not fully adapted to on-chain trading, particularly when it comes to managing network latency, execution constraints, and cross-chain settlement. Vectis has spent an extended period developing a cross-exchange arbitrage trading engine purpose-built for perp DEXs. This engine continuously scans multiple exchanges to capture both price dislocations and funding rate spreads across venues, enabling the strategy to systematically exploit inefficiencies that arise in a fragmented on-chain derivatives market. #### **Collateral Rebalancing** Because the strategy trades perpetual futures, effective collateral management is critical to maintaining system stability and avoiding liquidation risk. We continuously monitor the free collateral and margin health of every exchange account in use. When collateral on any exchange falls below our internal safety threshold, capital is automatically reallocated from other venues with excess buffer. This ensures that positions remain well-collateralized at all times, even during periods of heightened volatility or rapid funding changes. #### **Capital Allocation** Capital is dynamically allocated across exchanges based on opportunity strength and operational requirements, rather than being statically assigned. Allocation decisions consider funding rates, price spreads, liquidity conditions, and collateral needs on each venue. This dynamic allocation framework allows the vault to remain flexible, maximize capital efficiency, and continuously route funds toward exchanges offering the most attractive risk-adjusted arbitrage opportunities. ### Risk Management System #### Real-Time Risk Management & Automated Defence Our proprietary risk engine ensures continuous, cross-exchange monitoring of positions and equity. Engineered for resilience, the **Automated Rebalancing Engine** precision-allocates collateral across venues during extreme volatility, neutralizing liquidation risks in real-time. Beyond automation, the system features **Proactive Remediation**—detecting exchange-level anomalies such as ADL and abnormal funding rates to trigger immediate alerts and pre-defined corrective actions, seamlessly integrating algorithmic precision with expert oversight. #### Infrastructure & Security Optimization * **Liquidity Consolidation:** We have deprecated Drift in favor of the Binance + Hyperliquid core corridor, concentrating over 90% of total liquidity to secure institutional-grade depth and price stability. * **Tier-1 Custody Integration:** Assets are protected through a dual-custody framework, utilizing Ceffu for Binance and Cobo for Hyperliquid and other DEX operations, ensuring top-tier asset segregation. * **Protocol-Layer Hardening:** We have fortified the smart contract layer by implementing a 3/5 multi-sig threshold and an 8-hour timelock, providing a robust defense-in-depth against governance and execution risks. ### Fee structure and relief for affected users The standard fee structure for UltraX will remain unchanged. However, we recognize the financial strain the Drift incident has placed on our community. As a gesture of our commitment to you, we will **fully refund all intermediate fees** generated from now until **31 May 2026**, for users directly affected by the incident. #### Standard fee schedule | Fee type | Rate | | --------------- | ----- | | Management fee | 2.0% | | Performance fee | 20.0% | | Redemption fee | 0.3% | ### Risks While UltraX Arb V2 is designed to deliver consistent, risk-adjusted returns, users should be aware of the following risks: #### Smart Contract & Custody Risk Capital is deployed across multiple protocols and exchanges, each with their own smart contracts and operational dependencies. While mature infrastructure and institutional custody reduce risk, they cannot eliminate it entirely. #### Funding & Execution Risk Funding rates can change rapidly, and execution quality may deteriorate during periods of extreme volatility or liquidity stress. While the strategy actively monitors spreads and uses systematic rebalancing, temporary drawdowns are possible. #### Operational Complexity UltraX is an actively managed, multi-exchange strategy. Its performance depends on correct execution, routing, and monitoring across several venues and chains. --- # Agent Instructions: Querying This Documentation If you need additional information that is not directly available in this page, you can query the documentation dynamically by asking a question. Perform an HTTP GET request on the current page URL with the `ask` query parameter: ``` GET https://docs.vectis.finance/vaults/ultrax-arb-vault-v2.md?ask= ``` The question should be specific, self-contained, and written in natural language. The response will contain a direct answer to the question and relevant excerpts and sources from the documentation. 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