Emergency Withdrawals

Learn what to do when withdrawals fail due to insufficient liquidity and how Flux's Auto-Deallocating (ADA) mechanism protects LPs.

Overview

Flux vaults use standard ERC4626 withdrawals which succeed immediately or revert. There is no "emergency withdrawal" function. Instead, if a withdrawal fails due to insufficient liquidity, you must wait for:

1. Manager repayments - Managers naturally repay debt over time

2. Auto-Deallocating (ADA) - Vault's ADA Manager can force-close positions to free liquidity

When Withdrawals Fail

Understanding the Failure

// Attempt withdrawal
try vault.redeem(shares, msg.sender, msg.sender) returns (uint256 assets) {
    // Success - you received your assets
} catch Error(string memory reason) {
    // Failed - likely "Insufficient liquidity"
    // Vault doesn't have enough idle assets
}

Why It Happens

Withdrawals fail when:

• High utilization: Most vault assets are borrowed by managers

• No idle liquidity: idleLiquidity < requestedAmount

• Managers holding positions: Waiting to close for profitability

Example:

Vault State:
- Total Assets: $10M
- Borrowed by Managers: $9.7M
- Idle Liquidity: $300K

Your Withdrawal:
- Shares to redeem: 1,000
- Assets expected: $500K
- Result: FAILS (need $500K, only $300K available)

What To Do

Option 1: Wait for Natural Repayments

Managers repay debt over time as they:

• Close profitable positions

• Take profits

• Reduce leverage

• Exit the vault

Timeline: Hours to days depending on market conditions

How to monitor:

// Check idle liquidity periodically
function checkLiquidity(address vault, uint256 shares) external view returns (
    uint256 needed,
    uint256 available,
    bool canWithdraw
) {
    IFluxVault v = IFluxVault(vault);

    needed = v.previewRedeem(shares);
    available = v.getIdleLiquidity();
    canWithdraw = available >= needed;

    return (needed, available, canWithdraw);
}

// Poll every few hours
// Withdraw when canWithdraw == true

Option 2: Hope for ADA

If vault utilization is very high (>95%), the vault's ADA Manager may trigger Auto-Deallocating to free up liquidity.

What is ADA?

Auto-Deallocating allows the vault's designated ADA Manager (typically the vault creator) to force-close healthy manager positions during high utilization periods.

Key Points:

• LPs don't trigger ADA - Only the ADA Manager can

• Protects LPs - Frees liquidity for withdrawals

• Fair to managers - They receive their full net equity

• Conditional - Only works when utilization is very high

See Auto-Deallocating for full details.

When ADA Helps You:

Scenario:
- Vault utilization: 97% (very high!)
- Idle liquidity: $200K
- Your withdrawal needs: $500K
- ADA Manager sees the issue

Action:
- ADA Manager force-closes some manager positions
- Frees up $1M in liquidity
- You can now withdraw successfully

Important: You cannot force ADA to happen. You must wait for the ADA Manager to act.

Option 3: Sell Shares OTC

If you need immediate liquidity, sell your shares to another user at a discount:

// Transfer shares to buyer at 3% discount
uint256 shareValue = vault.convertToAssets(shares);
uint256 discountedPrice = shareValue * 97 / 100;

// Buyer pays you base asset
IERC20(baseAsset).transferFrom(buyer, msg.sender, discountedPrice);

// You transfer shares
vault.transfer(buyer, shares);

Pros:

• Immediate liquidity

• No waiting for vault liquidity

• Certainty

Cons:

• Must accept discount (3-5% typical)

• Need to find a buyer

• OTC risk

Monitoring Vault Liquidity

Check Before Withdrawing

function safeWithdraw(address vault, uint256 shares) external {
    IFluxVault v = IFluxVault(vault);

    // 1. Check liquidity
    uint256 needed = v.previewRedeem(shares);
    uint256 available = v.getIdleLiquidity();

    require(available >= needed, "Insufficient liquidity");

    // 2. Withdraw
    v.redeem(shares, msg.sender, msg.sender);
}

Monitor Utilization

function getUtilizationMetrics(address vault)
    external
    view
    returns (
        uint256 utilization,
        uint256 idleLiquidity,
        bool highRisk
    )
{
    IFluxVault v = IFluxVault(vault);

    uint256 totalAssets = v.totalAssets();
    uint256 totalDebt = v.totalPrincipalDebt();

    utilization = totalDebt * 100 / totalAssets;
    idleLiquidity = v.getIdleLiquidity();
    highRisk = utilization > 90;

    return (utilization, idleLiquidity, highRisk);
}

Utilization Guidelines:

• <70%: Healthy, easy withdrawals

• 70-85%: Normal, most withdrawals work

• 85-95%: High, some withdrawals may fail

• >95%: Very high, withdrawals likely to fail

Understanding ADA Protection

How ADA Protects You

ADA is Flux's mechanism to protect LPs during liquidity crunches:

Without ADA:

High utilization → No liquidity → LPs stuck → Potential bank run

With ADA:

High utilization → ADA Manager acts → Positions closed → Liquidity freed → LPs can withdraw

Who Is the ADA Manager?

The ADLAManager is a designated address that can trigger ADA. Usually:

• Vault creator (most common)

• Protocol governance

• Automated bot

• No one (ADA disabled)

// Check who the ADA Manager is
address adlManager = vault.STRATEGY().adlManager();

if (adlManager == address(0)) {
    // ADL is disabled - no protection
} else {
    // ADL is enabled - have protection
}

When Can ADA Be Triggered?

ADA can only be triggered when all of these are true:

1. High utilization: Vault utilization >95% (strategy-specific)

2. Manager in ADA zone: Manager's health ratio between liquidation threshold and ADL threshold

3. Position still solvent: Manager has positive equity

Example:

Strategy Config:
- Liquidation threshold: 110%
- ADL threshold: 120%

Manager Position:
- Health ratio: 115%
- In ADA zone? YES (110% < 115% < 120%)
- Can be ADA'd? Only if vault utilization >95%

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Best Practices

For Normal Withdrawals

1. Check liquidity first - Preview and verify before withdrawing

2. Monitor utilization - Withdraw when utilization is low

3. Be patient - If failed, wait for repayments

4. Plan ahead - Don't wait until you urgently need funds

For High Utilization Scenarios

1. Check ADA Manager - Verify vault has an active ADA Manager

2. Monitor for ADA - Watch for ADA events freeing liquidity

3. Consider discounts - Selling shares OTC may be faster

4. Communicate - Contact vault creator about liquidity issues

Risk Management

1. Diversify - Don't put all funds in one vault

2. Watch utilization - Prefer vaults with <85% utilization

3. Understand ADA - Know if vault has ADA protection

4. Emergency reserves - Keep some funds outside vaults

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Decision Framework

Need to withdraw?
│
├─ Check: Is liquidity available?
│  ├─ YES → Withdraw now
│  └─ NO ↓
│
├─ How urgent?
│  ├─ Not urgent → Wait for repayments (best option)
│  ├─ Somewhat urgent → Check if ADA will trigger
│  └─ Very urgent → Sell shares OTC at discount
│
└─ Can you wait?
   ├─ YES → Monitor liquidity, try again later
   └─ NO → Sell shares OTC

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Common Questions

Q: Why doesn't Flux have a withdrawal queue? A: Flux uses a simpler model - withdrawals either succeed or fail. ADA provides LP protection without queue complexity.

Q: What if the ADA Manager doesn't act? A: You must wait for natural repayments. Choose vaults with reputable, responsive ADA Managers.

Q: Can I force the ADLAManager to trigger ADA? A: No, only the designated ADA Manager can trigger ADA.

Q: What if ADA is disabled? A: You rely entirely on natural manager repayments. Avoid high-utilization vaults without ADA.

Q: Will I lose money if I wait? A: No, share value continues to accrue interest while you wait.

Q: How long does it typically take? A: Hours to days depending on:

• Vault utilization

• Market conditions

• Manager activity

• Whether ADA triggers

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Related Documentation

• Depositing & Withdrawing - Standard withdrawal process

• Auto-Deallocating (ADA) - Complete ADL documentation

• Risk Management - Understanding LP risks

• Understanding Shares & Returns - Share mechanics