> For the complete documentation index, see [llms.txt](https://docs.useflux.xyz/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.useflux.xyz/learn/overview.md).

# Overview

### What is Flux?

Flux is an omnichain [Proof of Yield](/learn/concepts/proof-of-yield.md) protocol that enables:

* **Liquidity providers** to earn verifiable yield with transparent risk
* **Managers** to access leveraged capital for complex, real-world strategies
* **Automatic risk management** through a Strategy-Aware Risk Engine
* **Transparent safety** through collateralized positions and automated liquidations

Unlike traditional lending protocols that only support simple token borrowing, Flux enables managers to execute any on-chain strategy—from multi-leg trades to cross-chain positions to complex yield farming. 

Flux is designed to support real-world strategies—complex, multi-asset, cross-protocol positions—while providing transparent safety through on-chain risk parameters, automated liquidations, and verifiable collateral tracking.

***

### Key Innovations

**1. Callback Architecture for Complex Strategies**

Traditional lending only supports simple borrow/withdraw operations. Flux enables managers to execute complex, multi-step strategies atomically.

The **callback architecture** gives managers the atomic, single-transaction flexibility of a wallet:

* Swap on one protocol, provide liquidity on another, execute any on-chain action
* Permissionless execution of complex, multi-leg strategies
* Atomic operations ensure all-or-nothing execution

After callback execution, the vault validates that positions maintain required collateral ratios in strategy-approved assets.

**2. Strategy-Aware Risk Engine**

This flexibility is protected by automated liquidation monitoring. When the strategy determines a position should be liquidated (based on health ratios, liquidity conditions, and other risk factors), anyone can execute the liquidation to protect LPs.

Unlike simple LTV-based systems, strategies can implement **multi-factor risk analysis**:

* **Liquidity risk**: Can the position actually be liquidated?
* **Slippage risk**: What's the cost of unwinding?
* **Asset composition risk**: Are all assets properly valued?
* **Cross-protocol risk**: How do positions interact?

This enables support for real-world strategies that other protocols can't handle.

**3. Verifiable Safety Through Transparency**

* All positions tracked onchain in real-time
* All risk parameters visible and immutable (or timelocked)
* All liquidations automatic and permissionless
* All oracle prices transparent and auditable

No trust required—only verification.

***

### Core Participants

#### 1. Liquidity Providers (LPs)

**Role**: Supply capital to earn **verifiable, transparent yield**

After seeing "trust-me" yield models fail repeatedly, LPs need infrastructure that provides safety through verification, not promises.

**Verifiable Safety**:

* **Collateralized Positions**: Managers post bonds to access capital
* **Real-time Transparency**: All positions visible onchain 24/7
* **Automatic Risk Management**: Liquidations trigger automatically, no governance delays
* **Strategy-Aware Risk**: Multi-factor risk analysis beyond simple LTV
* **Immutable Parameters**: Risk rules locked at vault creation (or timelocked changes)

**Benefits**:

* Earn interest from managers' borrowed capital
* Share of protocol fees and curator fees
* ERC4626-compliant vault shares (composable with DeFi)
* Standard and queued withdrawal options
* Emergency withdrawal mechanisms

**Why Flux is Different**: Unlike opaque yield aggregators, every Flux vault shows you:

* Exactly what assets managers can trade
* Exactly what collateral backs your capital
* Exactly when liquidations trigger
* Exactly how much managers have at risk first

**No black boxes. No trust required.**

#### 2. Managers

**Role**: Access leveraged capital with an **automated risk co-pilot**

Running complex, multi-asset strategies 24/7 is impossible to monitor manually. Flux automates the hard part—risk management—so you can focus on strategy execution.

**Automated Risk Co-Pilot**:

* **24/7 Position Monitoring**: System tracks health automatically
* **Automatic Liquidation Protection**: Unwinds positions before catastrophic loss
* **Multi-factor Risk Analysis**: Not just price—liquidity, slippage, composition
* **Real-time Feedback**: Know your exact risk status at all times

**Maximum Flexibility**:

* **Callback Architecture**: Atomic, single-transaction execution of complex strategies
* **Permissionless Execution**: Swap, farm, provide liquidity—any on-chain action
* **Multi-asset Support**: Trade any whitelisted asset (ERC20s, NFTs, yield-bearing tokens)
* **Cross-protocol**: Interact with Uniswap, Aave, Compound, Curve—all in one transaction

**The Only Rule**: Return the vault's whitelisted assets by end of callback.

**Collateralization**:

* Post bond (your capital) before borrowing
* Bond requirements defined by vault strategy
* Verifiable collateral—build trust with investors

**Benefits**:

* Leveraged capital access (e.g., 5x with 20% bond ratio)
* Execute complex, real-world strategies other protocols can't support
* Automated risk management saves you from catastrophic losses
* Transparent safety builds investor confidence

#### 3. Vault Creators (Curators)

**Role**: Deploy and configure vaults

**Responsibilities**:

* Choose strategy (interest rates, allowed assets, risk parameters)
* Choose access policy (permissionless or restricted)
* Earn creator fees (if strategy allows)

**Cannot**:

* Change parameters after deployment (for immutable strategies)
* Access vault funds
* Override strategy rules

#### 4. Liquidators

**Role**: Maintain protocol health by liquidating underwater positions

**Benefits**:

* Profit from liquidating unhealthy positions
* Capital-free liquidations via `locked_borrow()`
* Simplified liquidation bonus model

**How It Works**:

* **Healthy positions** (collateral ≥ debt): Zero bonus
* **Underwater positions** (collateral < debt): Profit based on `liquidationProfitMargin` (0-20%)
  * Default (1%): Pay 99% of collateral value, keep 1% profit
  * Altruistic (0%): Pay 100% of collateral value, break-even
  * Maximum (20%): Pay 80% of collateral value, keep 20% profit