A vault strategy is a plan for securely storing and managing digital assets within a specialized digital safe or contract. In decentralized finance (DeFi), this refers to automated investment strategies implemented via smart contracts, often called “vaults,” that pool user funds to pursue specific yield-generating opportunities. These strategies can involve lending, liquidity provision, or staking across various protocols. The vault aims to optimize returns and manage associated risks automatically for its participants.
Context
Vault strategies are a central element of the yield farming landscape in DeFi, attracting users seeking passive income from their digital assets. News often covers the performance and security of various vaults, highlighting both their potential returns and the inherent smart contract risks. The continuous evolution of these strategies, alongside efforts to enhance their security and transparency, remains a key area of development in the decentralized financial sector.
Insufficient liquidity during liquidation reward swaps created an economic vector, allowing a 5.2% capital drawdown on the yUSND vault through severe slippage manipulation.
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