Liquid Protocol

Unified yield vault and liquid staking with xLUX

Liquid Protocol

The Liquid Protocol provides unified yield aggregation through LiquidLUX (xLUX), the master yield vault that receives ALL protocol fees across the Lux ecosystem.

Overview

The Liquid Protocol enables:

Unified Yield: All protocol fees (DEX, bridge, lending, perps, NFT) flow to xLUX holders
Liquid Staking: Stake LUX, receive xLUX shares representing your portion of the vault
Governance Power: xLUX contributes to vLUX voting power
Flash Loans: ERC-3156 compliant flash loan support

┌─────────────────────────────────────────────────────────────────────────────┐
│                           LiquidLUX (xLUX)                                  │
├─────────────────────────────────────────────────────────────────────────────┤
│  FEE SOURCES:                                                               │
│  ┌────────┐ ┌────────┐ ┌────────┐ ┌────────┐ ┌────────┐ ┌────────┐        │
│  │  DEX   │ │ Bridge │ │Lending │ │ Perps  │ │ Liquid │ │  NFT   │        │
│  └────┬───┘ └────┬───┘ └────┬───┘ └────┬───┘ └────┬───┘ └────┬───┘        │
│       │          │          │          │          │          │             │
│       └──────────┴──────────┴──────────┴──────────┴──────────┘             │
│                                    │                                        │
│                                    ▼                                        │
│                        ┌───────────────────────┐                           │
│                        │   FeeSplitter         │                           │
│                        │   10% → Treasury      │                           │
│                        │   90% → LiquidLUX     │                           │
│                        └───────────────────────┘                           │
│                                    │                                        │
│                                    ▼                                        │
│                        ┌───────────────────────┐                           │
│                        │   LiquidLUX Vault     │                           │
│                        │   Mints xLUX shares   │                           │
│                        └───────────────────────┘                           │
└─────────────────────────────────────────────────────────────────────────────┘

Liquid Tokens (L*)

Bridge tokens on Lux Network use the L* prefix:

Token	Name	Description
LETH	Lux ETH	Bridged ETH from Ethereum
LBTC	Lux BTC	Bridged BTC
LUSD	Lux USD	Bridged stablecoins
LSOL	Lux SOL	Bridged SOL
LTON	Lux TON	Bridged TON
LBNB	Lux BNB	Bridged BNB

All L* tokens are in contracts/liquid/tokens/ and inherit from LRC20B.

Core Contracts

Contract	Purpose
LiquidLUX	Master yield vault - receives fees, mints xLUX
LiquidToken	Base ERC20 with ERC-3156 flash loans
LiquidVault	Cross-chain teleport vault
FeeSplitter	Routes protocol fees to LiquidLUX

Usage

Deposit & Get xLUX

import "@luxfi/contracts/liquid/LiquidLUX.sol";
import "@openzeppelin/contracts/token/ERC20/IERC20.sol";

LiquidLUX liquidLux = LiquidLUX(LIQUID_LUX_ADDRESS);
IERC20 wlux = IERC20(WLUX_ADDRESS);

// Approve WLUX
wlux.approve(address(liquidLux), amount);

// Deposit WLUX, receive xLUX shares
uint256 shares = liquidLux.deposit(amount, msg.sender);

Withdraw

// Check your xLUX balance
uint256 xLuxBalance = liquidLux.balanceOf(msg.sender);

// Withdraw - burns xLUX, returns WLUX
uint256 assets = liquidLux.withdraw(shares, msg.sender, msg.sender);

Check Yield

// Get current share price (increases as fees accrue)
uint256 sharePrice = liquidLux.convertToAssets(1e18);

// Get total assets under management
uint256 totalAssets = liquidLux.totalAssets();

// Get your share of the vault
uint256 myAssets = liquidLux.convertToAssets(liquidLux.balanceOf(msg.sender));

Fee Distribution

Protocol fees flow through FeeSplitter to LiquidLUX:

// Fee types
bytes32 FEE_DEX = keccak256("DEX");
bytes32 FEE_BRIDGE = keccak256("BRIDGE");
bytes32 FEE_LENDING = keccak256("LENDING");
bytes32 FEE_PERPS = keccak256("PERPS");
bytes32 FEE_LIQUID = keccak256("LIQUID");
bytes32 FEE_NFT = keccak256("NFT");

// FeeSplitter pushes fees to LiquidLUX
feeSplitter.pushFeesToLiquidLUX(FEE_DEX);

Flash Loans

LiquidToken supports ERC-3156 flash loans:

import "@luxfi/contracts/liquid/interfaces/IERC3156FlashLender.sol";

contract FlashBorrower is IERC3156FlashBorrower {
    function executeFlashLoan(address token, uint256 amount) external {
        IERC3156FlashLender(token).flashLoan(
            this,
            token,
            amount,
            ""
        );
    }

    function onFlashLoan(
        address initiator,
        address token,
        uint256 amount,
        uint256 fee,
        bytes calldata data
    ) external override returns (bytes32) {
        // Use the flash loaned tokens
        // ...

        // Approve repayment
        IERC20(token).approve(msg.sender, amount + fee);
        return keccak256("ERC3156FlashBorrower.onFlashLoan");
    }
}

Governance Integration

xLUX contributes to vLUX voting power:

// vLUX = xLUX + DLUX
// VotingLUX aggregates both sources

import "@luxfi/contracts/governance/VotingLUX.sol";

VotingLUX votingLux = VotingLUX(VOTING_LUX_ADDRESS);

// Get total voting power
uint256 votingPower = votingLux.getVotes(account);

Teleport Vaults

Cross-chain yield vaults for bridged assets:

Contract	Purpose
LiquidETH	ETH-specific vault with EigenLayer yield
LiquidVault	Generic cross-chain vault
TeleportVault	Base teleport functionality

Events

event Deposit(address indexed sender, address indexed owner, uint256 assets, uint256 shares);
event Withdraw(address indexed sender, address indexed receiver, address indexed owner, uint256 assets, uint256 shares);
event FeesReceived(bytes32 indexed feeType, uint256 amount);

Security Considerations

ERC-4626 Compliant: Standard vault interface
Non-Custodial: Users maintain control via shares
Pausable: Emergency pause capability
Access Control: Role-based permissions for fee distributors

Staking - LUX staking (sLUX)
Governance - vLUX voting
Treasury - Fee distribution

Liquid Protocol

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