# Liquidity Vaults

<h2 align="center">Overview</h2>

Horizon Liquidity allows users to deposit assets into automated vaults that provide liquidity to core protocol markets.

These vaults actively manage positions within dynamic price ranges and generate fees from trading activity, which accrue directly to liquidity providers.

Nova emissions provide additional incentives and are allocated across supported markets based on curator-defined weightings. This directs capital toward key markets while allowing users to earn yield from both trading fees and protocol incentives.

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<h3 align="center">Architectural Foundation</h3>

Horizon Liquidity is built on Algebra Integral V4 CLAMM, a modular, EVM-compatible concentrated liquidity automated market maker.

Algebra V4 provides:

* Range-based concentrated liquidity positions
* NFT-based LP positions with configurable tick ranges
* Zap enables single-token entry and exit, automatically creating and unwinding balanced liquidity positions
* Market-specific fee configuration
* Plugin-enabled extensibility
* Separation of AMM core logic from auxiliary logic layers

This architecture enables Horizon to treat liquidity as programmable infrastructure rather than static pooled capital.

The modular design allows incentive logic, fee routing, and accounting extensions to integrate directly with liquidity markets while preserving core AMM invariants.

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<h3 align="center"><strong>Concentrated Liquidity and Automated Vaults</strong></h3>

Horizon Liquidity uses concentrated liquidity through automated vaults. Participants deposit assets into vaults, and the vault deploys and manages liquidity within active price ranges.

The vault automatically:

* Selects and adjusts price ranges
* Rebalances positions
* Compounds earned fees

This improves:

* Fee generation per unit of capital
* Active liquidity utilisation
* Market depth within active ranges
* Pricing and execution efficiency

The result is higher capital efficiency and consistently active liquidity without requiring manual management.

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<h3 align="center">Liquidity as Risk Infrastructure</h3>

Within Horizon, liquidity supports lending market stability and risk management.

Deep and responsive liquidity:

* Reduces slippage during liquidations
* Improves execution reliability under stress
* Supports accurate pricing
* Limits bad debt formation
* Enables more efficient collateral parameters

Liquidity depth directly affects market safety and capital efficiency. Horizon Liquidity therefore functions as both an incentive layer and core risk infrastructure.

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<h3 align="center">Farm LP Fees &#x26; Buyback and Burn</h3>

Nova supply contraction is linked to protocol activity. Platform trading fees are distributed as follows:

72% → Liquidity providers\
28% → Nova buyback and burn

The buyback allocation is used to purchase Nova on the open market. Acquired tokens are permanently burnt.

Buyback volume increases with trading activity, linking Nova supply reduction directly to liquidity usage and market volume.

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<h3 align="center">Deposit and Withdrawal Fees</h3>

Liquidity farms within the Horizon protocol apply a 0.5% fee on deposits and a 0.5% fee on withdrawals. These fees contribute to Horizon’s buyback and burn mechanism, supporting long term sustainability and value accrual for holders.

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<h3 align="center">Incentive Integration</h3>

Horizon Liquidity receives Nova emissions as defined in the Nova Emission Model.

Nova emissions distributed to liquidity markets:

* Are fixed and time-based
* Do not scale with TVL or trading volume
* Are allocated using effective share weighting
* Cannot be accelerated or altered

User participation affects distribution share, not total emissions.

This structure ensures predictable issuance while allowing competitive capital allocation across approved markets.

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<h3 align="center">Market Configuration</h3>

Algebra’s architecture allows market-specific configuration.

Each liquidity pair may define:

* Fee parameters appropriate to asset volatility
* Incentive eligibility status
* Approved emission weighting

This allows Horizon to support:

* Blue-chip markets
* Stablecoin pairs
* Long-tail assets

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<h3 align="center">Multi-Chain Deployment</h3>

Algebra Integral separates AMM core logic from plugin layers.

This modularity allows Horizon Liquidity to deploy across multiple EVM-compatible networks while preserving consistent economic logic.

Horizon Liquidity may operate on:

* Ethereum
* Base
* Sonic
* BNB Chain
* Polygon
* Arbitrum
* Optimism

Each deployment maintains protocol-defined fee routing and incentive logic.

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<h3 align="center">System Role Summary</h3>

Horizon Liquidity is the protocol’s liquidity coordination engine.

It provides the infrastructure for capital efficient markets, incentive distribution, and fee routing across the Horizon ecosystem.

It:

* Enables capital-efficient markets
* Strengthens lending stability
* Routes trading fees into Nova supply reduction
* Integrates with the Nova reward framework
* Scales across multiple chains under consistent economic rules

Liquidity within Horizon is treated as programmable capital infrastructure, supporting both market efficiency and long-term supply discipline.

Horizon Liquidity receives a portion of Nova incentives as defined in the Nova Emission Model (see Nova Overview section).
