Tethra - DeepBook Liquidity Vaults

Overview

Tethra is a set of trustless, one-deposit liquidity vaults built on DeepBook, the on-chain central-limit-order-book DEX on Sui. You deposit dUSDC once, the vault mints you a share coin and supplies that liquidity to a DeepBook venue on your behalf, and everything runs on-chain with no trusted operator and a fee charged only on profit.

Tethra was submitted for Sui Overflow 2026 in the DeepBook Predict track and is deployed on Sui testnet.

Three Composable Products

Tier 1: The Predict PLP Vault

The flagship supplies risk-managed pool-liquidity-provider liquidity that underwrites BTC binary positions and vertical ranges on DeepBook Predict, and auto-compounds. Share accounting uses a virtual-offset to guard against first-deposit share attacks and overflow-safe math. A 10 percent performance fee is charged on realized profit at withdrawal only, capped at 30 percent in code, so 90 percent of yield stays with depositors, with no management fee, deposit fee, or lock-up.

Tier 2: The Margin Lending Vault

Two vaults supply SUI or DBUSDC to DeepBook Margin lending pools, where the assets are borrowed by margin traders for variable yield. The vault holds a single supplier capability and supplies or withdraws inside the user's own transaction, so it is trustless and needs no keeper. It also captures the DeepBook Margin supply-referral fee and compounds it straight back to depositors as bonus yield.

Tier 3: The Borrow Market

An open, isolated money market lets anyone supply dUSDC to earn interest or lock Tier 1 vault shares as collateral and borrow dUSDC against them up to a 50 percent maximum loan-to-value, valued at the vault cost-basis floor with no oracle. Past an 80 percent LTV threshold a position is liquidatable, and liquidation is self-redeeming: the market redeems the borrower's shares through the Tier 1 vault, repays the debt, keeps a small penalty, and returns the surplus. No swaps, no external liquidity, and no liquidator capital are required.

The Research Behind the Risk

Tethra is deliberately evidence-based rather than aspirational. A strategy engine in TypeScript contains a validated SVI volatility-surface pricing engine matched against the protocol's real on-chain quotes to a median error of about 1e-5, plus reproducible backtests on real historical BTC data. That research is where the exposure caps, the decision not to spot-hedge the binaries, and the economics come from, and the same engine powers a live volatility-surface viewer and a per-oracle exposure stress test in the app.

How It Works

Three on-chain Move contracts hold the three markets, each non-custodial: you hold a share coin, the contract holds the liquidity, and you redeem at your share price at any time. Two always-on TypeScript keepers keep the books honest, one clearing settled DeepBook Predict positions so vault net asset value stays current and one liquidating any borrow position past its LTV threshold. A Next.js app lets you deposit, lend, supply, and borrow, and reads every figure live from the testnet contracts, including a PLP risk dashboard and an SVI volatility surface.

Tech Stack

• Smart contracts: Move on Sui with DeepBook v3 for both Predict and Margin, non-custodial share coins, virtual-offset share math, and cost-basis-floor valuation.
• Borrow market: an isolated single-collateral market with a kinked interest curve and self-redeeming liquidation, with no oracle.
• Keepers and research: TypeScript and Node.js for the settlement and liquidation keepers and a validated SVI pricing engine with reproducible BTC backtests.
• Frontend: Next.js and React with the Sui dApp Kit and ECharts.

Challenges and Solutions

One Deposit, Real Work

The vault wraps the constant, error-prone work of pricing, sizing, supplying, and redeeming DeepBook liquidity into a single deposit, controlling risk with exposure limits rather than promising a fat yield.

Composability Without an Oracle

The borrow market values vault shares at the vault cost-basis floor and liquidates by redeeming through the vault that issued them, so vault shares become usable as collateral with no price feed and no external liquidity.

Honesty Over Yield

The fee is charged only on realized profit, the cost-basis floor is conservative rather than mark-to-market, and every number in the app is read live from the contracts or clearly marked as a backtest.

What I Learned

• Non-custodial vault design in Move, including virtual-offset share math to prevent share-inflation attacks.
• Composing DeFi primitives so one share coin can be earned in one tier and used as collateral in another.
• Building and validating an SVI options-pricing engine against real on-chain quotes.
• Designing keepers that keep on-chain accounting current for settlement and liquidation.