3. Market-Making Mechanics Explaining the full MM strategy in detail would be quite complex, but the core principle is simple. A market maker does NOT take directional views intentionally. Very loosely speaking, market-making profitability implies that traders, on average, are losing money, and vice versa. Providing liquidity to an MM vault is effectively a bet against the average profitability of the counterparty traders. Intuitively, when prices rise, a passive market maker should sell more and experience what is commonly referred to as impermanent loss. What you observed, the vault accumulating more inventory as prices rise, is actually a counterintuitive but very informative case. It implies that during the price increase, many on-chain traders were willing to cross the spread and take the opposite side, effectively betting against the trend. As a result, traders were, on average, selling into a rising market while paying spreads, and the market maker earned not only the spread but also directional gains. This is not the vault “buying high and selling low.” It is the opposite. Traders are doing that, and the vault is systematically taking the other side. Importantly, this outcome is NOT the result of the vault making an active or intentional bet. It emerges purely from trader behavior. The key takeaway for LPs is that participating in an MM vault is a bet that traders, on average, make suboptimal decisions. The current ROI data is empirical evidence that, so far, this assumption has held up quite well.