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Vault Calculations

Definition

Vault calculations refer to the complex mathematical operations performed within decentralized finance (DeFi) protocols to manage and optimize user assets held in automated strategies. These computations determine parameters such as collateral ratios, liquidation thresholds, interest accruals, and yield optimization strategies for assets locked within smart contract-controlled vaults. Accuracy in these calculations is paramount, as errors can lead to incorrect asset distribution, unexpected liquidations, or significant financial losses for users. They are critical for the secure operation of many DeFi platforms.