Vaults
Vaults are investment instruments that employ a specific set of strategies for yield farming. They make use of automation to continually invest and reinvest deposited funds, which help to achieve high levels of compound interest. By using a Leaven Network vault to compound your gains, you save thousands of transactions with their associated gas costs, and precious personal time. Instead of manually harvesting and selling rewards, buying more tokens, and reinvesting that continuously, a vault does all that automatically at a high frequency.
In a Leaven Network vault, you earn more of the asset you stake in it, in an liquidity pool (LP) token, for example, vaults where one can stake CAKE-BNB LP will result in more CAKE-BNB LP over time, effectively growing your share in the liquidity pool and thus allowing for more and more fees and rewards over time.
Despite the name 'Vault' suggests, user funds are never locked in any vault on Leaven Network. One could always withdraw from a vault at any moment in time. Leaven Network also does not own user funds staked in vaults. However, it is generally best to view vaults as investment tools to store funds for the medium to long term in order to have the effects of compounding really kick in.
When browsing the vaults on the platform, you will see the annual percentage yield (APY), which takes the frequent compounding into consideration compared to annual percentage rate (APR) which does not. You will also see daily interest percentages and the total amount invested in a vault by all users (TVL). Furthermore, one can see what underlying platform the vault is using as a source of revenue.
Each vault can refer to a pair of tokens invested in liquidity pools, such as CAKE-BNB LP tokens within the Binance Smart Chain ecosystem. After depositing tokens to a vault, the user is supplied with vault specific leavTokens which represent their share in the vault. We will elaborate on leavTokens in the next section.
Summarizing, vaults can:
- Efficiently execute yield farming strategies.
- Compound rewards into the initially deposited token amount.
- Use any asset as liquidity.
- Provide one asset as collateral for another.
- Manage collateral at a safe level to mitigate liquidation.
- Put any asset to work to generate a yield.
- Reinvest earned profits.
Users can sit back and relax, and watch their investment grow!
A leavToken is an interest-bearing, tokenized proof of deposit that you will receive at the moment you deposit in a Leaven vault. A leavToken is unique per vault, e.g. you get leavenCakeV2CAKE-BNB tokens when depositing CAKE-BNB LP into the CAKE-BNB vault. One can view leavTokens as the receipt of your vault deposit.
Leaven Network users should hold on tightly to their leavTokens and not sell or exchange it, since you would lose ownership of your staked vault assets if you did so!
Leaven's vaults automatically create more of your deposited asset in the form of compound interest. By holding leavTokens in your wallet, they are increasing in value against its corresponding vault asset. The number of leavTokens in your wallet will remain constant, but the quantity of the vault tokens they can be redeemed for increases. This is also the reason why leavTokens do not 1:1 match with the token amount initially deposited.
Whenever you want to withdraw the tokens that are staked for you in Leaven's vault, you simply initiate a withdrawal transaction to exchange them. The leavTokens are then taken from your wallet and burned, and your deposited assets plus yield will be given back to you.
Leaven's leavToken system has a few major advantages:
- 1.leavTokens allow any user to withdraw their fair share of deposited funds;
- 2.the system allows you to deposit the leavToken receipt to a cold or hardware wallet for ultimate safety;
- 3.your privacy is maintained, as you remain anonymous to Leaven Network. Your funds in the vault are not tied to the wallet address from which you made the deposit, since the leavTokens are the only evidence of your share in the vault. Therefore, you could withdraw your share of funds from a different address if you moved your leavTokens to it;
- 4.leavTokens have tax benefits: since you're not selling off rewards, nor getting staking rewards direct to your address, you do not have taxable events when you have funds staked in a vault;
- 5.Lastly, leavTokens can be used as interest-bearing collateral.
Vaults are normally harvested twice a day (every 12 hours) and profits are automatically reinvested (compounded).
They could, but vaults help you save on personal time and transaction fees, maintain healthy collateral to debt ratios, self-optimize for the best possible yields, and automatically reinvest earnings. Attempting to do this manually would result in large inefficiencies. At Leaven Network we like to say: "Sit back and relax, the vault does all the work for you."
Vaults have a performance fee structure, taking a percentage cut of all harvest rewards. This fee on profits is split up and distributed back to LVN holders and stakers, allocated to Leaven Network's Treasury, sent to the strategist that developed the vault and sent to the one calling the vault's harvest function. These fees are already built into the APY of each vault and daily rate. You do not need to calculate it yourself. The performance fee and the fee structure breakdown are presented inside Leaven Network Fees Breakdown .
The performance fee on additional yield, i.e. vault profits, is largely distributed back to LVN holders and stakers and is the one of the main sources of Leaven Network's platform revenue. A part of it also funds Leaven Network's treasury which is used to further fund platform development, security and other initiatives. The performance fee was also implemented to promote community engagement and governance participation. A successful and engaged community is critical for our future growth, which in turn rewards platform users even more.
Yes. Our displayed APY values reflect the predicted rate earned on a vault in a year. This rate is determined by the underlying platform it uses, the strategy that it is interacting with at the time, the total amount of funds in the vault and also takes into account the effect of compounding. As a unique feature, we have also included all vault fees in the APY calculation.
Leaven vaults are audited, but this does not mean that a vault is entirely risk free. Below are some of the general vault risks:
- Assets deposited into the vault have no risk of decreasing in quantity but can decrease in monetary value.
- As with any smart contract, the ultimate risk is that an investor's funds can end up stolen or unable to be withdrawn. The team does take steps to quantify the security risks of smart contracts and will only interact with ones that meet a specific set of requirements after excessive testing to make sure the underlying platform does not contain so called 'rug-pull' functions.
More detailed vault risks, or better yet, information on Leaven's vault safety expressed by the Leaven Safety Score can be found here: Leaven Safety Score
You will always withdraw the token type that you deposited, because at Leaven you earn what you stake. You will get the amount you deposited plus the yield generated. In the case of LP token vaults, you may also chose to use Leaven's Zap feature to withdraw as one of the two tokens representing the LP.
Liquidity pool (LP) vaults work by reinvesting the fees awarded to LP participants. In return for providing liquidity to the pool, many platforms reward investors with tokens. Our vaults regularly harvest these rewards, sell it, buy more of the LP’s underlying assets, and then reinvest to complete the cycle.
This compounds the rewards gained from a liquidity pool. Leaven Network creates strategies that automate this process, saving you time and gas fees in comparison to farming manually. This is all done for a tiny fee that is distributed back to those who hold and/or stake LVN tokens. A small percentage also goes to the Leaven Network's Treasury.
Pending rewards are not reflected in the balance until they are swapped for the initial deposited token. This can vary depending on the strategy running.
Each vault on the platform is named after the token that users can deposit in it. For example, the CAKE-BNB LP vault uses CAKE-BNB LP tokens for its investment strategy.
Last modified 6mo ago