How Lorenzo Protocol Uses Algorithmic Trading in DeFi Vaults
An explainer on how Lorenzo integrates institutional-style algorithmic trading into on-chain vaults and tokenized funds.
How Lorenzo Protocol Uses Algorithmic Trading in DeFi Vaults
Lorenzo Protocol is an on-chain asset management platform that embeds algorithmic trading strategies directly into its DeFi vault infrastructure.
These strategies include momentum models, trend-following systems, and arbitrage, all executed automatically through smart contracts and approved execution frameworks. In traditional finance, similar approaches are usually limited to institutional funds.
Capital is managed using a dual-vault architecture. Simple vaults run a single strategy with clear risk boundaries, while Composed vaults combine multiple simple vaults or advanced algorithms into diversified portfolios.
Users access these strategies through On-Chain Traded Funds (OTFs)—tokenized products that represent exposure to managed vault allocations rather than individual trades.
All strategy execution, capital movement, and performance data are recorded on-chain, enabling real-time transparency and auditability.
Insight: Algorithmic trading vaults illustrate how DeFi can replicate structured fund management without relying on opaque intermediaries.
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Educational explainer · DeFi infrastructure
Disclaimer: Not Financial Advice
