Tokenized Vault Standard

The five-minute read

One action, walked through

1. Deposit assets, receive shares.
2. Redeem shares, receive assets.
3. An integrator reads convertToAssets rather than assuming a 1:1 peg.
4. What does one share redeem for, and who computes it?

The argument, unpacked

What has to be true

• The standard does not make a vault solvent.
• It does not define the strategy.
• A malicious vault can implement the interface and still steal assets. The interface is not an audit.

What happened after the paper

Yearn, Morpho vaults and many lending wrappers adopted it. The strategy behind the share is still a separate document.

What to check before you use the idea

• What does one share redeem for, and who computes it?
• Can the conversion change inside a transaction?
• Is the strategy in the same contract as the share?

Terms

Share

The ERC-20 that represents a claim on the vault's assets.

Asset

The token the vault custodies.

The problem the paper names

Every lending pool invented its own share token. Integrators guessed how to deposit and how shares convert.

What the design proposes

• Assets go in. Shares come out.
• The conversion functions are the interface.
• Yield is whatever increases assets per share. The standard does not promise yield.

How the mechanism is specified

• Deposit assets, receive shares.
• Redeem shares, receive assets.
• An integrator reads convertToAssets rather than assuming a 1:1 peg.

What this page does not treat as proven

• The standard does not make a vault solvent.
• It does not define the strategy.
• A malicious vault can implement the interface and still steal assets. The interface is not an audit.

Why a venture studio still reads it

A protocol that accepts 'any yield token' should say whether it requires this interface, and what it does when convertToAssets moves suddenly.