What are Yield Vaults?
Yield vaults are automated strategies that optimize returns by compounding rewards, rebalancing positions, and executing complex DeFi strategies. You deposit assets and the vault handles everything.
How Yield Vaults Work
Auto-Compounding: Vaults automatically harvest rewards and reinvest them, capturing compound interest without manual intervention. Strategy Optimization: Vault managers allocate across protocols to maximize risk-adjusted returns. Gas Efficiency: Costs are shared across all depositors, making frequent compounding economical.Top Vault Protocols
- Convex Finance: Boosted Curve yields through CRV/CVX stacking
- Yearn Finance: Multi-strategy vaults across DeFi
- Beefy Finance: Multi-chain auto-compounding
- StakeDAO: veToken liquid lockers
Vault Types
Single Asset: Deposit one token, vault executes strategies LP Vaults: Deposit LP tokens for auto-compounded pool rewards Boosted Vaults: Use governance tokens for enhanced yieldsRisks to Consider
- Strategy Risk: Vault strategies can underperform or fail
- Smart Contract Risk: Additional contract layer
- Management Fees: Typically 2% management + 20% performance
- Dependency Risk: Relies on underlying protocol stability
Getting Started
- Research vault strategies and track records
- Deposit assets into chosen vault
- Receive vault tokens representing your share
- Withdraw anytime (may have delays)