BufferVault

Purpose

The BufferVault is Aquarius's pooled capital protection mechanism. It solves a critical problem in DeFi risk mitigation: when a position needs protection, the capital to protect it must already be available.

In traditional DeFi, users facing liquidation must manually source funds, pay gas, and execute transactions under time pressure. The BufferVault eliminates this by pre-positioning mitigation capital in a shared pool that the Aqua Agent can draw from instantly.

Contract Architecture

BufferVault.sol is a share-based vault that integrates directly with Aave V3:

contract BufferVault {
    IERC20 public asset;         // Underlying collateral token
    IPool public pool;           // Aave V3 Pool
    address public agent;        // Authorized Aqua Agent
 
    mapping(address => uint256) public aqShares;
    uint256 public totalShares;
 
    function deposit(uint256 amount) external returns (uint256 shares);
    function withdraw(uint256 shares) external returns (uint256 amount);
    function injectLiquidity(
        address beneficiary,
        address debtAsset,
        uint256 amount
    ) external onlyAgent;
}

Deposit and Share Mechanics

When a user deposits into the vault, they receive aqShares proportional to their contribution relative to the total pool:

If totalShares == 0:
  shares = depositAmount

Otherwise:
  shares = (depositAmount * totalShares) / totalAssets

This ensures that:

• Early depositors receive shares at a 1:1 ratio
• Subsequent depositors receive shares proportional to the current pool value
• Share dilution is fair and transparent

Withdrawal

Users can withdraw their proportional share of the vault at any time:

withdrawAmount = (userShares * totalAssets) / totalShares

Liquidity Injection

When the Aqua Agent detects a critical risk event and selects vault-backed mitigation, it calls injectLiquidity():

function injectLiquidity(
    address beneficiary,
    address debtAsset,
    uint256 amount
) external onlyAgent {
    asset.approve(address(pool), amount);
    pool.repay(debtAsset, amount, 2, beneficiary);
    emit LiquidityInjected(beneficiary, debtAsset, amount);
}

This function:

1. Approves the Aave V3 Pool to spend vault assets
2. Repays the beneficiary's debt using pooled reserves
3. Emits an auditable event for tracking

The onlyAgent modifier ensures that only the registered Aqua Agent can trigger liquidity injection. No other address — including vault depositors — can initiate this operation.

Vault Token Model

aqShares represent:

Risk Considerations

Pool Depletion

If the vault processes multiple simultaneous mitigation events, the available capital may be temporarily reduced. Aquarius mitigates this through:

• Injection caps — Each mitigation event has a maximum injection amount
• Queue ordering — Mitigation requests are processed in severity order
• Reserve ratio — A configurable minimum reserve percentage is maintained

Vault Isolation

The BufferVault is isolated from other Aquarius contracts:

• Vault funds cannot be redirected to the Mitigation Executor
• The Aqua Agent can only call injectLiquidity(), not withdraw()
• Vault state is independent of the Position Graph Store

Integration with CRE Workflow

The CRE workflow selects vault-backed mitigation when:

1. The at-risk position does not have sufficient non-custodial approvals
2. The vault has sufficient liquidity for the required mitigation amount
3. The position qualifies for vault protection (based on registration and eligibility)

The decision is deterministic — no manual approval is required once the position is registered for vault protection.