Vaults 101

A vault is:

1. A non-custodial smart contract

2. Transparent and verifiable

3. Defined by parameters that govern allowable actions by vault curators

Why Vaults?

Operational Simplification

Users can access diversified yield strategies without managing individual allocations across multiple protocols, chains, and markets. Vaults consolidate the complexity of position management, risk monitoring, and performance tracking, enabling a dedicated curator to oversee the multiple aspects of a vault.

Non-Custodial Architecture

Vault participants retain custody of their assets throughout their interaction with a vault. Users can verify a vault's holdings, curator actions, and withdraw assets at any time.

Strategic Versatility

Vaults serve as flexible infrastructure enabling multiple institutional use cases:

• Supporting institutional stablecoin growth and utility

• Powering fintech and banking earn programs

• Creating productive use cases for tokenized real-world assets

• Enabling payments companies to optimize treasury holdings

As banks, fintechs, and payment providers expand their onchain operations, vaults provide a critical integration layer between traditional financial services and DeFi protocols.

Core Vault Features

A DeFi vault is fundamentally composed of three elements:

1. Non-Custodial Smart Contract: Code deployed onchain that holds user assets and executes defined strategies.

2. Transparent Operations: All transactions, holdings, and allocations are publicly verifiable onchain.

3. Defined Parameters: Predefined rules that constrain allowable actions by vault curators.

Common Vault Strategies

Strategy	Example
Lending	Allocate supplied assets to decentralized lending markets, optimizing for risk-adjusted returns. For example, USDC, ETH, or BTC lending vaults on Morpho and Kamino.
Trading	Execute delta-neutral strategies using derivatives and spot positions to generate returns. For example, hJLP vaults on Drift.
Multi-chain	Deploy capital across multiple chains and protocols simultaneously, dynamically rebalancing based on market conditions and risk parameters. For example, Gauntlet USD Alpha on Aera may allocate supply to a blend of Gauntlet USDC Core on Mainnet and Gauntlet USDC Prime on Base.

Transparency and Verifiability

Every vault action is recorded immutably onchain:

• Performance: Historical return data verifiable against onchain transactions

• Allocations: Current deployment across protocols and strategies

• Fee Structure: Transparent management and performance fee parameters