DeFi Vaults Evolve Beyond Single-Protocol Earn Vaults
The DeFi vault is an innovative financial product that has gained popularity in recent times. It can range from simple single-protocol products to complex vehicles operating across multiple protocols and chains, with a layer of consumer-facing products on top. The earn vault, which is the most widely adopted modern design, spreads one deposited asset across isolated lending markets according to the curator's parameters.
Morpho pioneered this pattern through its MetaMorpho product, allowing users to deposit an asset and distribute it across various markets. This two-level structure provides transparency, as the depositor holds a single position at the vault level while the vault holds many positions at the market level.
Multi-strategy vaults operate at a higher complexity level, accepting deposits from one asset and deploying them across multiple strategies, protocols, and chains. A notable example is Veda's Boring Vaults, which rebalances allocations based on yield, risk, and liquidity conditions.