Layer II: Vault
Vaults were created to provide investors with yield-maximizing strategies that benefit from pooling capital or automation. Gas fees are reduced on a per-user basis when capital is pooled and sent through the network in aggregate. Many yield farming strategies rely on the compounding of invested capital, requiring constant action by the investor; vaults automate such processes.
โ€ŒVaults employ more active strategies than just lending or providing liquidity through Layer I products and services. These strategies could include but aren't limited to:
  • Supplying collateral and borrowing other assets
  • Providing liquidity and collecting trading fees
  • Farming other tokens and compounding them for a profit
Ultimately each vault does a precise operation set in advance by a strategist. It's primarily micro and static in nature. Projects would either launch new vaults or upgrade existing vaults through redeployment to keep up with market environments and changes in the DeFi yield structure.
Last modified 6mo ago
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