What Is Vault?

In decentralised finance, a vault refers to a smart contract that manages assets, in non-custodial manner, for several stakeholders. Usually when you deposit to a vault you receive share or liquidity provider tokens as a return.

Most vaults are self-custodial and allow you to withdraw your assets at any time.

Common vault applications:

  • Yield farming vaults that deploy assets across multiple protocols

  • Lending optimisation representing deposits in money markets

  • Liquidity provision for automated market makers

  • Strategy vaults implementing complex DeFi trading strategies

A common vault smart contract standards are ERC-4626 and ERC-7540. An example of vault protocol are Lagoon and Enzyme protocol.

See also