Core Insights - The Lighter vault, associated with the Kanye West YZY meme coin, is experiencing significant challenges due to aggressive trading strategies and a lack of auto-deleveraging mechanisms [1][7]. Group 1: Market Dynamics - Crypto prices have shown recovery post-deleveraging on October 10, but the YZY vault on Lighter remains in a precarious position [1]. - Perpetual decentralized exchanges (DEXes) like Lighter rely heavily on community participation to remain competitive, offering features such as 10x leverage and public trades [2]. Group 2: Vault Operations - Lighter and other perpetual DEXes have established vaults to manage liquidity, allowing users to deposit funds and earn revenue based on trading activity [3]. - As of October 14, the Lighter Liquidity Provider (LLP) manages over $388 million, with the Ethereum vault being the largest at over $11 million in position value [3]. Group 3: Risk Management - The Lighter vault is designed to provide liquidity and manage liquidations, acting as a counterparty to prevent bankruptcy during adverse trading conditions [4]. - Unlike Hyperliquid, which employs auto-deleveraging to manage risk, Lighter has not reported such measures, leading to increased exposure and potential losses for the YZY vault [5][6]. Group 4: Current Challenges - The aggressive approach of the Lighter vault has resulted in the YZY vault being deep in the red, suffering from high funding rates without closing positions to mitigate losses [7].