Neutron Cross-Chain Vault Deployment

A production-ready cross-chain vault system built on the Valence Protocol that enables users to deposit selected denoms on Ethereum while generating yield on Neutron through Mars Protocol lending and Supervaults.

Architecture

The system operates across three blockchain networks:

• Ethereum: User-facing ERC-4626 vault where users deposit collateral
• Neutron: CosmWasm-based liquidity provision via Mars Protocol, Supervaults, and MaxBTC strategy vaults
• Cosmos Hub: IBC/ICA bridging/messaging between Ethereum and Neutron
• IBC Eureka: Ethereum ↔ Cosmos Hub bridging
• ZK Co-processor: Generating proofs for IBC Eureka route queries and withdrawal obligations

Components

• packages/: Common utility types and functions used across different vaults
• strategies/: Directory for storing different strategies, each of which contain:
  • deploy/: Deployment automation for Neutron (CosmWasm) and Ethereum (Solidity) contracts
  • strategist/: Automated off-chain solver orchestrating cross-chain operations
  • types/: Shared type definitions and configuration management

Available Strategies

The following strategies are currently implemented:

• Lombard BTC: lbtc strategy that deploys user deposits into a Mars lending position and a Supervault
• USDC: usdc strategy that deploys user deposits into a Supervault
• WBTC: wbtc strategy that deploys user deposits into a Mars lending position and multiple Supervaults

Phase shifts

Strategies below allow the Vault owner to perform a phase shift. This means that any wBTC held by the strategy will be migrated into maxBTC, and the assets will get redeployed according to the Neutron authorizations:

• Lombard BTC
• WBTC

How It Works

1. Users deposit collateral tokens into Ethereum ERC-4626 vault, receive vault shares
2. Strategist monitors user deposits and bridges the funds: Ethereum → Cosmos Hub/Noble → Neutron The IBC Eureka route fetched from the Skip API is validated by the co-processor
3. Strategist deploys bridged assets into Mars Protocol and Neutron Supervaults
4. Users issue withdraw requests into Ethereum ERC-4626 vault, immediately burning their shares
5. Strategist picks up user withdraw requests from the indexer and posts them to the co-processor for validation
6. Strategist posts co-processor withdraw request proofs to the Neutron Authorizations contract which turns them into withdrawal obligations that get enqueued into the Clearing Queue contract
7. Strategist withdraws the funds necessary to cover the outstanding withdraw obligations and clears them
8. The Strategist calculates the new redemption rate and posts it to the ERC-4626 vault, concluding the cycle

Roles and Permissions

Role	Description	Responsible Entity	Network
Strategist	Orchestrates cross-chain operations with highly constrained actions limited to pre-defined routes. Critical responsibility is to update the redemption rate regularly. Failure to update the rate automatically pauses the vault, requiring the owner to unpause	Hadron Labs	Both Neutron and Ethereum
Vault Owner	Controls the vault contract parameters and emergency functions. Only the owner can upgrade and pause the contracts	Neutron DAO (multisig) on Ethereum, Neutron Valence-specific security DAO on Neutron	Both Neutron and Ethereum
Verification Gateway Owner	Manages the verification gateway for cross-chain state verification	Valency Security Committee	Both Neutron and Ethereum

The co-processor and light client services are trustless services managed by Valence.

Documentation

• Strategist Getting Started Guide
• Deployment Guide