GlossaryAdvanced
Vault (DeFi)
A smart contract that pools deposited funds and automates a specific investment strategy.
A DeFi vault is a smart contract that accepts deposits from multiple users and automatically executes a specific, predefined strategy with the pooled funds, issuing depositors a token representing their share.
Vaults let users access an automated strategy without executing each step manually themselves, at the cost of trusting the vault's specific strategy and code.
Examples
- A vault might automatically compound staking rewards back into the original position on a regular schedule.
- Each vault's specific strategy and risk should be reviewed independently before depositing.