What is a Vault?

gm, Today we’re going to chat about Tessera Vaults and their lifecycle, from start to finish.

Vaults go through five distinct phases:

Before jumping alllll the way in, let’s do a refresher on what Vaults actually are and how they work.

A Vault is a non-custodial smart contract wallet that is part of the Tessera Protocol. Vaults are trustless, permissionless, and decentralized.

No centralized person or group can directly access or control the NFTs in a Tessera Vault, including Tessera. Transferring an NFT to a Vault triggers an auction of Raes that represent ownership and governance of the Vaulted NFT.

If you’re interacting with a Vault and get confused why you can’t find a particular function, confirm the Vault is in the phase you’re expecting. For example, if you’re trying to buy Raes from a vault auction, confirm the Vault is actually in the Distribution rather than Secondary Marketplace phase.

The Distribution phase begins following the closure of the Soon™ phase. This is when the auction begins and you can start purchasing Raes. At launch, all Tessera Vaults will sell via Last Price Dutch Auctions. The distribution phase can last up to 26 hours and ends immediately after all available Raes have been purchased. At the close of the distribution the curator can withdraw the ETH proceeds from the primary sale minus artist royalties and the Tessera platform fee.

In the future, we may develop new mechanisms for Vault auctions… stay tuned for more updates.

When the Distribution phase ends, the Secondary Marketplace phase begins. You will be able to buy and sell Raes on the Secondary Marketplace tab within each Vault page. We invite you to buy and list Raes on our Secondary Marketplace with 0% fees.

Vaults remain in the Secondary Marketplace phase indefinitely unless a Rae owner initiates a reconstitution attempt (see Phase 4 below). If an attempted reconstitution fails, the Vault remains as-is and you can continue to buy, love, and list Raes to your heart’s desire.

If a Rae owner initiates a buyout attempt, the Vault enters what we call the Reconstitution Phase. At launch all Vaults can be reconstituted through Optimistic Buyouts. During this period, anyone can view the details of the buyout proposal on the Vault page and choose to reject (by purchasing the Raes from the offer) or accept it (by doing nothing). You are still able to buy and sell Raes on the Secondary Marketplace while this is occurring. If the buyout attempt fails, the Vault returns to the Secondary Marketplace phase. If a buyout succeeds the Vault will close (see Vault Closure Phase below).

In the future, we may develop new mechanisms for Vault buyouts… stay tuned for more updates.

If and when a buyout succeeds, the buyer can claim the NFT(s) from the Vault. Rae owners can burn (destroy) their Raes in exchange for their portion of the ETH from the buyout, minus a fee to Tessera. The Secondary Marketplace for the Raes from a closed Vault will no longer be available for listing or purchase after the reconstitution is complete.

TL;DR: Vaults start with a countdown, initiate the auction, distribute until there are none left, are open for business on the Secondary Marketplace, facilitate reconstitutions, and rest in peace when they’re bought out. When a vault reaches its final phase, don’t despair! There’s always a new Vault around the corner 👀

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