DeFi Vaults Comparative Analysis
Introduction
“Vault” is a highly overloaded term in DeFi that can vary from protocol to protocol based on the use case and implementation. The goal of this post is to disambiguate the generic term “Vault” across different use cases. Generally, vaults are smart contracts that pool user funds to execute automated investment strategies, simplifying access to financial opportunities such as lending, yield farming, staking, trading, and arbitrage. By categorizing vaults into lending, staking, perpetual futures, and Multi-Protocol, this report focusses on some of the largest DeFi Vault protocols and elucidates their most common distinct roles, operational mechanisms, and risk profiles.
Vault Categories and Protocol Analysis
1. Lending Vaults
Lending vaults facilitate over-collateralized or undercollateralized lending and borrowing, generating yields through interest payments. They vary from peer-to-peer (P2P) matching to pooled lending with credit delegation.
Morpho
Overview
Morpho, founded in 2022 by Morpho Labs, began as a peer-to-peer lending layer on Aave and Compound, optimizing rates and achieving $2B in TVL by 2023. It transitioned to Morpho Blue (V1) in 2024, a permissionless protocol with isolated, user-created lending markets. By June 2025, Morpho V2 introduced fixed-rate, fixed-term loans, scaling to $8.5B in TVL and powering integrations with major DeFi platforms like Coinbase.
Architecture
Morpho’s architecture has evolved to prioritize flexibility, efficiency, and scalability:
Morpho Blue (V1): A singleton contract hosts isolated markets, each defined by one loan asset, one collateral asset, a liquidation loan-to-value (LLTV) ratio, an oracle, and the AdaptiveCurveIRM, targeting 90% utilization with dynamic rate adjustments. MetaMorpho Vaults, compliant with ERC-4626, aggregate liquidity across markets, curated by third parties like Gauntlet and MEV capital for tailored risk profiles.
Morpho V2: Announced in June 2025, V2 introduces Morpho Markets V2 (an intent-based P2P marketplace for fixed-rate, fixed-term loans with customizable collateral, including real-world assets and portfolios) and Morpho Vaults V2 (yield-generating vaults with instant liquidity, allocating across V1, V2, and other protocols). Key features include:
Offered Liquidity: Users make loan offers without pre-allocating capital, reducing fragmentation.
Market-Driven Pricing: Open markets set rates dynamically, unlike fixed formulas.
Flexible Terms: Supports multi-asset collateral, KYC whitelisting, and cross-chain compatibility.
Native Multichain: Morpho V2 is natively multichain, enabling vaults to allocate assets across multiple blockchain networks. This is facilitated through cross-chain bridges and adapters, allowing seamless asset transfers and yield optimization across ecosystems. For example, a vault can deposit stablecoins on Ethereum and lend on Polygon markets, maximizing returns while maintaining isolated risk profiles.
Asset Utilization: Deposited assets in vaults, such as stablecoins, are actively allocated across multiple pools to maximize vault yields and market efficiency. Assets used as collateral to borrow against, such as BTC, are restricted to their specific pool and are not reused across multiple pools, ensuring clear capital boundaries and effective risk management.
Roles within the Morpho Ecosystem
Morpho’s vault system is supported by distinct roles that ensure strategic management, liquidity optimization, and operational efficiency. These roles create a robust framework for vault performance and security.
Curator: Curators are entities or individuals responsible for optimizing risk-adjusted returns through strategic decisions. They define the vault’s investment thesis, select permissible protocols and markets, set risk parameters, appoint Allocators, and configure vault mechanics like fees, interest rate models, and compliance gating. In Morpho Vaults V2, Curators use granular tools like the ID & Cap System to set absolute or relative exposure limits. Their actions are subject to a timelock, ensuring transparency and depositor protection.
Public Allocator: The Public Allocator is a smart contract that mitigates liquidity fragmentation by reallocating unused funds across isolated markets. Controlled by Curators, it sets flow caps, market preferences, and fees to move liquidity seamlessly, enabling borrowers to access larger loan amounts in a single transaction. This enhances liquidity network effects while maintaining the security of isolated markets, combining pool-like convenience with risk curation.
Depositor: Depositors provide liquidity to Morpho vaults, earning yields on their assets while paying a small fee or spread to Curators. Their role is passive, relying on Curators and Allocators to optimize returns within the vault’s strategy. Depositors benefit from instant liquidity in Morpho Vaults V2 and can exit if they disagree with Curator actions during the timelock period.
Bundler: Bundlers are smart contracts that streamline complex workflows by combining multiple actions into a single transaction, reducing gas fees and transaction failures. Morpho’s Bundler3 enables advanced operations like one-click leverage, BTC yield farming or looping, and portfolio rebalancing. These actions enhance user experience and efficiency for complex DeFi strategies.
Sentinel: Sentinels (evolved from V1’s Guardian) act as a safety mechanism, reactively reducing risk by lowering caps, deallocating funds, or revoking Curator actions during timelocks. They ensure checks and balances within the system.
Advantages
High Yields: P2P matching delivers 8-12% APY, surpassing Aave’s 6-10%.
Flexibility: Permissionless market creation supports diverse assets, varying levels of risk/reward, and bespoke loan terms.
Security: Immutable contracts with 25+ audits and a $2.5M bug bounty program.
Institutional Reach: Becoming the flagship borrowing platform for Coinbase solidified its role amongst institutional players.
Trade-offs
Curator Risk: Vault performance depends on third-party curators, with suboptimal strategies potentially reducing yields.
Liquidation Risk: Positions exceeding LTV thresholds face liquidation.
Liquidity Fragmentation: Isolated markets may dilute liquidity, though MetaMorpho Vaults mitigate this.
Smart Contract Risk: A $2.6M frontend exploit in April 2025 underscores vulnerabilities inherent in complex systems.
Euler
Overview
Euler, launched in 2021 by Euler Labs, is a permissionless Ethereum lending protocol enabling markets for any ERC-20 token paired with Uniswap v3 WETH. After a $197M exploit in 2023, Euler v2 introduced modular vaults and real-world asset integration, growing its TVL from virtually nonexistent at the end of 2024 to over $2.5B by mid-July 2025.
Architecture
Euler V2’s modular design redefines DeFi lending with two core components, enhanced by multichain capabilities for broader accessibility and efficiency.
Euler Vault Kit (EVK): A toolkit for deploying ERC-4626 vaults, enabling permissionless creation of lending markets for single assets. Supports vault classes: governed (managed by DAOs or risk curators), ungoverned (fixed parameters), escrowed collateral (collateral-only), and yield aggregator (optimizing across vaults).
Ethereum Vault Connector (EVC): An open-source protocol facilitating cross-vault collateralization, allowing deposits in one vault to serve as collateral for others, reducing liquidity fragmentation. Supports advanced features like multicall batching and gasless transactions.
Additional Features:
FeeFlow: A reverse Dutch auction for fee management, enabling passive income for vault creators.
Price Oracle System: Uses Uniswap v3 TWAP and Chainlink for asset pricing, minimizing oracle risks.
Native Multichain: Euler V2 is natively multichain, enabling vaults to operate across multiple blockchain networks through cross-chain bridges and interoperability protocols. For example, a vault can deposit assets on Ethereum and lend on Arbitrum markets, optimizing yields while maintaining isolated risk profiles.
Asset Utilization: Deposited assets, such as stablecoins, ETH, or real-world assets, are allocated across vaults via the Ethereum Vault Connector (EVC), enabling cross-vault collateralization to maximize yield. Assets used as collateral to borrow against, such as LRTs or ETH, remain restricted to their specific vault, with health score checks enforced by the EVC to maintain clear risk boundaries and ensure effective risk management.
Roles within the Euler Ecosystem
Euler V2’s modular lending platform is supported by distinct roles that facilitate vault creation, liquidity provision, risk management, and governance. These roles ensure flexibility, security, and efficiency for users, aligning with Euler’s permissionless and community-driven design.
Vault Creator: Vault Creators are developers or entities who deploy custom lending vaults using the Euler Vault Kit (EVK). They define vault parameters, such as asset types, interest rates, loan-to-value (LTV) ratios, and risk profiles, tailoring vaults to specific strategies. Creators can opt for governed vaults, retaining active risk management, or ungoverned vaults with fixed parameters. This role drives Euler’s permissionless market creation, enabling diverse lending opportunities.
Depositor: Depositors provide liquidity to Euler vaults by depositing assets, receiving eTokens that represent their stake and accrue interest. Their role is passive, relying on Vault Creators or governance for yield optimization. Depositors benefit from cross-vault collateralization via the EVC, where deposits in one vault can serve as collateral for borrowing in others, enhancing capital efficiency.
Borrower: Borrowers use deposited assets as collateral to borrow funds from Euler vaults, receiving dTokens to represent their debt. They can borrow against diverse assets, including long-tail tokens, due to Euler’s permissionless listing. Borrowers must maintain healthy collateral-to-debt ratios to avoid liquidation, with the EVC enforcing health checks. Euler’s unique dToken transferability allows borrowers to transfer debt to others (with sufficient collateral), enabling flexible debt management.
Liquidator: Liquidators monitor and manage unhealthy positions within Euler vaults. If a borrower’s health score (based on collateral-to-debt ratio) falls below 1, Liquidators can repay part or all of the debt, seizing collateral at a discount that scales with the violation’s severity. Euler V2’s “soft” liquidation mechanism, supported by stability pools, allows partial debt repayment to minimize losses, while the “forgiveAccountStatusCheck” function enables bypassing health checks for strategic liquidations, balancing efficiency and risk.
Governor: Governors are EUL token holders participating in Euler DAO, which oversees protocol governance. They vote on proposals to adjust vault parameters, promote assets to higher tiers, set borrow factors based on oracle ratings, or manage EUL token distribution via gauges. Governors ensure community-driven oversight, balancing risk, accessibility, and decentralization in vault operations.
Advantages
Flexibility: Permissionless vault creation supports diverse assets, including RWAs and LRTs, with customizable risk parameters.
Capital Efficiency: Cross-vault collateralization and rehypothecation enable higher yields (5-12% APY, outperforming vault benchmarks).
Security: 31+ audits and a $1M bug bounty program post-2023 exploit enhance trust.
Innovation: EulerSwap, a DEX with lending integration, boosts liquidity via just-in-time swaps and LP collateralization.
Trade-offs
Complexity Risk: Modular design increases smart contract complexity, potentially introducing vulnerabilities.
Liquidation Risk: High LTV ratios risk liquidations in volatile markets.
Curator Risk: Governed vaults rely on risk managers, whose errors could impact yields.
2023 Exploit Impact: In March 2023, Euler suffered a $197M flash loan exploit, one of DeFi’s largest hacks, exploiting a logic flaw in donation-based liquidations. Over 95% of funds were recovered by July 2023 through negotiations and white-hat efforts, but the incident led to a TVL drop from $400M to $10M and eroded user trust. Euler v2’s rebuilt architecture and enhanced audits aim to prevent recurrence.
Maple
Overview
Maple Finance, launched in 2021 on Ethereum, offers borrowing and lending services for institutions. After a $36M default in 2022, Maple v2 introduced in-house underwriting through Maple Direct and focused on overcollateralized loans, while Syrup.fi’s 2024 launch replaced MPL to service retail clients. Expanding to Solana in 2025, Maple achieved $8B in loan originations and $3B in TVL by mid-2025.
Architecture
Maple’s architecture balances institutional-grade lending with DeFi accessibility:
Lending Pools: Independent pools, managed by Pool Delegates, accept assets like BTC, ETH, SOL, and stablecoins. Delegates perform due diligence, set loan terms, and manage credit risk. Undercollateralized loans target institutions with strong credit profiles, while overcollateralized loans offer lower risk and more flexible terms. Yields vary.
Syrup.fi: A permissionless protocol enabling retail users to deposit USDC and earn yields from overcollateralized institutional loans. Depositors receive syrupUSDC LP tokens, integrable with DeFi protocols for additional yield opportunities. Syrup’s TVL reached $58.2M within a month of launch.
Hybrid Compliance: Institutional borrowers undergo KYC and rigorous credit assessments, while retail lenders access permissionless pools without KYC, supported by on-chain transparency and legal agreements.
Asset Utilization: Deposited assets, such as stablecoins, are allocated across lending pools to maximize yield, often used as liquidity for institutional loans or integrated into DeFi protocols (e.g., Pendle, Aave) for additional yield strategies. Assets used as collateral to borrow against, such as BTC or ETH, remain restricted to their specific pool, with active collateral management and over-collateralization requirements enforced through margin calls and liquidations to maintain clear risk boundaries and ensure effective risk management.
Native Multichain: Maple V2 is natively multichain, supporting operations across Ethereum, Solana, and other networks through cross-chain bridges and interoperability protocols like Chainlink’s Cross-Chain Interoperability Protocol (CCIP). For example, SyrupUSDC can be minted and transferred natively on Solana, enabling lenders to deposit assets on Ethereum and lend on Solana markets, optimizing yields while maintaining isolated risk profiles. This multichain support enhances global accessibility and liquidity for Maple’s lending pools.
Roles within the Maple Ecosystem
Maple’s lending ecosystem, powered by fixed-term, fixed-rate loan pools and permissionless vault creation in Maple V2, is supported by distinct roles that facilitate loan underwriting, liquidity provision, risk management, and governance. These roles ensure robust pool performance and accessibility for institutional and retail participants.
Pool Delegate: Pool Delegates are entities or individuals managing lending pools, responsible for underwriting loans, assessing borrower creditworthiness, and setting loan terms. In Maple V2, they create permissionless pools, defining risk parameters and asset strategies. Delegates earn a portion of loan interest and fees, with their expertise driving pool yields and stability.
Lender: Lenders provide liquidity to Maple pools by depositing assets , earning fixed-rate yields from loan interest. Their role is passive, relying on Pool Delegates for loan management, and they receive Pool Tokens representing their share. Lenders benefit from instant liquidity in V2 pools and can withdraw funds at loan term ends or during liquidity windows.
Borrower: Borrowers, typically institutional entities, request fixed-term, fixed-rate loans from Maple pools, providing on-chain or off-chain collateral. They undergo credit assessments by Pool Delegates and repay loans with interest, facing liquidation if they default. Borrowers benefit from predictable terms tailored to institutional needs.
Liquidator: Liquidators monitor and manage defaulted loans, seizing collateral from Borrowers who fail to repay or whose collateral falls below required LTV ratios. In Maple V2, automated or third-party liquidations protect pool stability, distributing seized assets to Lenders to minimize losses.
Governor: Governors are MPL token holders participating in Maple DAO, voting on protocol upgrades, pool parameters, fee structures, and asset listings. In Maple V2, they influence permissionless pool frameworks and risk standards, ensuring community-driven oversight and decentralization.
Advantages
Institutional Appeal: Partnerships with Jito Foundation, Figment, and Circle enhance credibility, catering to hedge funds, custodians, and institutional players seeking real-world asset exposure.
Stable Yields: Fixed-rate loans (7.5–20%) outperform Aave’s volatile 6–10% yields, driven by high-quality collateral and multi-strategy approaches like staking.
Transparency: On-chain loan terms, borrower identities, and pool performance reduce counterparty risk, with standardized agreements ensuring trust.
Accessibility: Syrup.fi democratizes access to institutional yields, boosting liquidity for retail users.
Trade-offs
Credit Risk: Undercollateralized loans carry higher default risk despite rigorous Delegate assessments, while overcollateralization mitigates but doesn’t eliminate risk.
Retail Accessibility: KYC for institutional borrowing limits retail participation in undercollateralized pools, though Syrup.fi addresses this for overcollateralized lending.
Smart Contract Risk: Complex pool structures increase vulnerability, despite audits by reputable firms.
2022 Default Crisis: Orthogonal Trading’s $36M default, tied to FTX exposure, slashed TVL from $900M to $25M, eroding trust. Maple v2’s focus on overcollateralization and Maple Direct underwriting has since restored stability.
2. Staking Vaults
Staking vaults enable users to stake native blockchain tokens to secure networks, often issuing liquid tokens to maintain flexibility while earning rewards. They optimize yield through restaking across multiple protocols, balancing risk and return.
Symbiotic
Overview
Symbiotic, launched in June 2024 by Symbiotic Labs on Ethereum, is a permissionless restaking protocol enabling users to stake assets like ETH and LSTs to secure Actively Validated Services(AVS), offering customizable staking and enhanced capital efficiency. With $1.6B in TVL by mid-2025 and partnerships with Lido, Ethena, and Gauntlet, it has become a cornerstone of the restaking ecosystem.
Architecture
Symbiotic’s modular, network-agnostic design maximizes restaking flexibility and security through immutable core contracts on Ethereum, ensuring stability and minimizing governance risks.
Restaking Core: Users stake assets to secure AVSs, earning network-specific rewards. Liquid restaking tokens are issued, enabling integration with DeFi protocols like Aave or Morpho for additional yield opportunities.
Vault System: Collateral vaults aggregate staked assets, curated by third-party risk managers to optimize allocations across AVSs based on risk and yield profiles. Vaults manage deposits, withdrawals, slashing, and reward distribution, supporting diverse configurations for network-specific needs.
Multichain Architecture: Symbiotic V2 supports multichain operations, enabling vaults to allocate staked assets across Ethereum and layer-2 networks via cross-chain bridges and interoperability protocols like Chainlink’s CCIP. For example, a vault can stake ETH on Ethereum to secure an Arbitrum-based AVS, optimizing yields while maintaining isolated risk profiles. This multichain framework enhances liquidity, reduces network-specific risks, and broadens access to diverse DeFi ecosystems.
Collateral and Rehypothecation: Symbiotic supports a wide range of collateral assets, including ERC-20 tokens, liquid staking tokens, and Ethereum validator withdrawal credentials. Deposited collateral is aggregated in vaults and rehypothecated to secure multiple AVSs simultaneously, maximizing capital efficiency without transferring assets out of the vault. Assets used as collateral to secure AVSs remain tied to specific vaults, with slashing conditions enforced by Resolvers to ensure clear risk boundaries and effective risk management.
Adaptive Risk Management: Gauntlet’s risk models dynamically adjust vault allocations to minimize slashing risks, ensuring stable returns. Immutable, non-upgradeable contracts reduce governance-related vulnerabilities.
Roles within the Symbiotic Ecosystem
Symbiotic’s shared security ecosystem is supported by distinct roles that facilitate staking, network security, and dispute resolution, ensuring flexibility, efficiency, and decentralization in restaking operations.
Curator: Curators are entities or individuals managing vaults, responsible for defining staking strategies, selecting AVSs, and allocating staked assets to Operators. They set risk parameters and approve qualified Operators, optimizing risk-adjusted returns. Curators leverage reputation-based systems to select reliable Operators, with their decisions subject to transparent, on-chain verification to protect Stakers.
Staker (Depositor): Stakers deposit assets into vaults, earning yields from AVS rewards and points while paying fees to Curators. Their role is passive, relying on Curators to optimize allocations. Stakers receive liquid restaking tokens, enabling integration with DeFi protocols for additional yield, and can withdraw assets subject to vaultHob vault terms.
Operator: Operators are professional entities running infrastructure for AVSs. They receive staked assets from vaults to secure networks, ensuring operational integrity. Operators are selected by Curators based on reputation and performance, earning rewards for their services while facing potential slashing for misconduct.
Resolver: Resolvers are contracts or entities handling dispute resolution and slashing enforcement. They validate slashing events initiated by AVSs, with veto power to prevent invalid penalties. Resolvers can be automated systems, DAOs, multisig wallets, or external committees, agreed upon by Curators and AVSs, ensuring fair risk management.
Network: Networks, such as layer-2 protocols or dApps, are AVSs requiring decentralized security from Symbiotic’s Operators. They define security needs and connect with vaults to access staked assets, enabling customized validation services like transaction sequencing or oracle provision.
Advantages
High Yields: Restaking yields 8-15% APY, surpassing traditional staking’s 3-5%, driven by AVS rewards and points.
Capital Efficiency: Rehypothecation allows staked assets to secure multiple networks without additional capital.
Flexibility: Permissionless vault creation supports diverse assets and user-defined risk profiles.
Liquidity: LRTs enable staked assets to integrate with DeFi ecosystems.
Trade-offs
Slashing Risk: Misaligned AVS incentives or network failures may lead to penalties, mitigated by curator oversight.
Complexity: Restaking across multiple networks increases technical risks.
Adoption Lag: $1.6B TVL trails EigenLayer’s $17B, reflecting newer market entry.
2024 Exploit Impact: In July 2024, Symbiotic suffered a $5.8M exploit due to an oracle misconfiguration in a vault contract, impacting 2% of TVL. Funds were fully recovered within 48 hours via white-hat efforts and protocol upgrades, with Chainlink integration enhancing oracle security.
3. Perpetual Vaults
Perpetual vaults automate trading strategies for perpetual futures, leveraging funding rates and market-making to generate yields without expiration dates. These vaults optimize returns through delta-neutral or directional strategies, offering high leverage and liquidity for traders.
Drift
Overview
Drift Protocol, launched in 2021 by Drift Labs, is a Solana based decentralized perpetual futures exchange offering up to 50x leverage trading for most crypto assets. Drift v2’s hybrid liquidity model and automated vaults, like Gauntlet Basis Alpha, have driven over $1.2B in TVL by July 2025, solidifying its leadership in the Perp DEX landscape.
Architecture
Drift v2’s architecture blends high-speed trading with sophisticated vault automation, leveraging Solana’s low-cost, high-throughput infrastructure:
Perpetual Futures Engine: Integrates a virtual Automated Market Maker (vAMM) for price discovery with a decentralized limit order book (DLOB) managed by Keeper bots for transparent, peer-to-peer trade execution. The Smart Margin system supports both cross-margin and isolated-margin trading, dynamically adjusting requirements based on portfolio risk to enhance capital efficiency and reduce liquidations.
Just-in-Time (JIT) Liquidity: Market orders trigger real-time Dutch auctions among market makers, ensuring zero slippage and efficient price discovery.
Insurance Fund Vaults: Users stake assets to backstop trader defaults, earning ~50% of protocol revenue (trading fees, borrow fees, liquidation profits), distributed hourly.
SDK Integration: Enables seamless vault management and strategy execution, with native compatibility for Solana wallets like Phantom and Sollet.
Risk Engine: Upgraded in v2, it dynamically adjusts margin requirements and liquidation thresholds based on market volatility, minimizing unexpected liquidations.
Not Multichain (Solana Focus): Drift operates solely on Solana, leveraging its sub-second execution and low fees for efficient trading. This single-chain focus simplifies operations but limits liquidity benefits of multichain protocols, relying on Solana’s ecosystem for assets and oracles.
Asset Utilization: Lending assets are used across vaults or trading positions to maximize yield and market efficiency. Collateral assets are restricted to specific vaults or subaccounts, with margin checks ensuring risk isolation.
Drift Protocol v2 architecture. Source: Drift.trade
Roles within the Drift Ecosystem
Drift’s vault ecosystem supports distinct roles that facilitate trading, liquidity provision, and risk management. These roles ensure efficient operation of perpetual vaults and the broader trading platform.
Vault Manager: Vault Managers (often professional entities like Gauntlet) oversee Drift’s vault program, managing pooled assets in strategies like SOL Basis or Gauntlet Basis Alpha. They set vault parameters and execute trades on behalf of depositors. Managers optimize returns through funding rate capture and rebalancing, with their strategies subject to a redemption period to protect depositors from abrupt withdrawals.
Depositor: Depositors provide liquidity to Drift vaults by depositing assets, earning yields from trading profits, funding rates, and protocol revenue while paying fees to Vault Managers. Their role is passive, relying on Managers to execute strategies. Depositors receive pro-rata shares of vault performance, subject to a redemption period before withdrawals, ensuring stability for remaining depositors.
Market Maker: Market Makers provide Just-in-Time (JIT) liquidity through Dutch auctions, bidding to fill market orders within ~5 seconds to minimize slippage. They also contribute to the decentralized limit order book (DLOB) by placing limit orders, earning trading fees. Market Makers use the jit-proxy program to automate bids, enhancing liquidity for perpetual and spot markets.
Liquidator: Liquidators, often operating as incentivized bots, monitor user accounts and vaults for undercollateralized positions. If a user’s margin ratio falls below the maintenance threshold, Liquidators execute the liquidate instruction, closing positions to protect the protocol. In vault liquidations, a permissioned admin may temporarily take control to reduce leverage, ensuring withdrawals meet margin requirements.
Keeper: Keepers are decentralized bots maintaining the DLOB by sorting on-chain limit orders off-chain and matching taker orders with resting limit orders or the vAMM. They monitor oracle prices (via Pyth Network) and trigger liquidations or order executions, earning a portion of taker fees for their role in ensuring market efficiency and protocol stability.
Advantages
High Yields: Vaults generate 10-20% APY from funding rates, staking rewards, and protocol revenue, significantly outperforming traditional yield farming.
Liquidity: The hybrid model (JIT, vAMM, DLOB) ensures deep liquidity and low slippage, even in volatile markets.
Flexibility: Gauntlet’s strategies cater to diverse risk profiles, from delta-neutral to directional bets, with gasless trading enhancing accessibility.
Transparency and UX: On-chain orderbook, hourly reward distribution, and a simplified interface with Solana-native wallet integration provide a seamless, trustless experience.
Performance: Sub-second trade execution and fees under a cent enable high-frequency and multi-leg strategies, rivaling centralized exchanges.
Trade-offs
Market Risk: Negative funding rates or sharp volatility can erode vault yields or lead to losses, particularly for leveraged strategies.
Withdrawal Delay: A cooldown for vault withdrawals limits liquidity, potentially deterring users needing quick access to funds.
Complexity: Multi-strategy vaults and dynamic rebalancing increase operational risks, requiring user sophistication.
Solana Downtime Risk: Solana’s historical outages could disrupt trade execution or price updates, especially during high-volatility periods.
Regulatory Uncertainty: Decentralized derivatives face increasing scrutiny, with potential restrictions in jurisdictions like the U.S. impacting accessibility.
Security: A November 2022 exploit caused a $3.8M loss due to a vAMM pricing bug. While v2’s orderbook integration and audits by firms like OtterSec reduce risks, smart contract vulnerabilities remain a concern.
Hyperliquid
Overview
Hyperliquid, launched in 2023 by Hyperliquid Labs, is a decentralized perpetual futures exchange offering up to 50x leverage trading for crypto assets. Its massively successful airdrop in late 2024 propelled it near the top 10 crypto assets by market cap by mid-2025. With $2.6B in TVL and 71% of DeFi perpetuals market share, Hyperliquid has become a dominant force in the crypto ecosystem.
Architecture
Hyperliquid’s architecture integrates trading and vault automation:
Perpetual Futures Engine: Uses a fully on-chain orderbook and HyperBFT consensus for real-time execution and transparent margin management, supporting spot and derivatives trading.
HLP Vault: A protocol vault for market-making and liquidations, earning 46% of platform revenue (trading fees, funding fees, liquidation profits), distributed hourly to depositors with a 4-day lockup. Maintains a net short position for consistent profits.
User-Created Vaults: Users deploy vaults with custom strategies, earning 10% profit share.
HyperEVM: Permissionless smart contract layer enabling dApp development, interoperable with RustVM for native oracles and HIP-1 token listings.
Not Multichain: Hyperliquid operates solely on HyperEVM. This single-chain design enhances speed and simplicity but restricts liquidity to the hyperliquid ecosystem, relying on native oracles and assets bridged into their blockchain.
Collateral and Rehypothecation: Deposited assets in the HLP Vault or user-created vaults serve as collateral for leveraged perpetuals or market-making. Collateral is restricted to specific vaults or accounts, with no rehypothecation across vaults to maintain risk isolation. The risk engine enforces margin requirements and liquidations to ensure robust risk management.
Roles within the Hyperliquid Ecosystem
Hyperliquid’s vault and trading ecosystem, powered by HyperEVM, is supported by distinct roles that facilitate trading, liquidity provision, and risk management, ensuring efficient operation of perpetual vaults and the broader platform.
Vault Creator: Vault Creators, often users or entities like Growi HF, deploy user-created vaults with custom trading strategies. They set vault parameters and manage automated trading or rebalancing, earning a 10% profit share while optimizing yields for depositors.
Depositor: Depositors provide liquidity to the HLP Vault or user-created vaults by depositing assets, earning yields from trading fees, funding rates, and liquidation profits. Their role is passive, relying on Vault Creators or the HLP Vault’s automated strategies, with a 4-day lockup period for withdrawals to ensure vault stability.
Market Maker: Market Makers provide liquidity to Hyperliquid’s on-chain orderbook, placing limit orders or participating in real-time order matching to minimize slippage. They earn trading fees and benefit from the platform’s high-throughput execution, supporting both spot and perpetual markets.
Liquidator: Liquidators monitor trading accounts and vaults for undercollateralized positions. If margin requirements are breached, they execute liquidations, closing positions to protect the protocol and HLP Vault depositors. Liquidations yield profits, with 46% of proceeds distributed to HLP Vault depositors.
Validator: Validators operate HyperEVM’s HyperBFT consensus, securing the blockchain and processing transactions at high throughput. Validators ensure platform stability and execute protocol upgrades. Staked HYPE tokens incentivize their role.
Advantages
High Yields: HLP and Growi HF yield 13-86% APY, outperforming most yield sources within DeFi.
Liquidity: Deep pools and orderbook ensure efficient execution, with $400M daily spot volume.
Accessibility: No KYC and low fees democratize trading.
Community-Driven: 54% of revenue funds HYPE buybacks, enhancing token value.
Trade-offs
Market Risk: Negative funding rates or volatility can reduce yields or cause losses.
Withdrawal Delay: 4-day lockup for HLP limits liquidity.
Centralization Concerns: Five validators manage 78% of staked HYPE, raising governance risks.
2025 JELLY Fiasco: In March 2025, a whale manipulated the JELLYJELLY market, causing a $12M loss in the HLP Vault. Validator-led delisting and forced liquidation at $0.02 mitigated 80% of losses, but sparked criticism for centralized intervention. Enhanced risk controls followed, though trust issues remain.
4. Multi-Protocol Vaults
Multi-protocol vaults tokenize complex DeFi strategies across multiple blockchains and protocols, enabling developers to build consumer-grade yield products with automated risk management and cross-chain interoperability. These vaults simplify user access to optimized yields while maintaining security and transparency.
Veda
Overview
Veda, launched in March 2024 by Seven Seas Capital, is a native yield infrastructure layer enabling protocols and wallets to seamlessly integrate complex DeFi strategies, accessing yield across multiple blockchains with a single click. Its BoringVault standard, supporting over $4B in TVL, tokenizes yield from Aave, Morpho, Pendle, and Uniswap for retail and institutional investors.
Architecture
Veda’s modular design abstracts DeFi complexity:
BoringVault: A secure, audited smart contract framework for managing capital, using Merkle proofs for permissioned rebalancing and standardized pricing.
Teller, Manager, Accountant Contracts: Teller handles share minting/redemption, Manager oversees strategy execution, and Accountant tracks real-time valuations.
Cross-Chain Integration: Supports EVM, SVM, and MoveVM, deploying capital across chains like Ethereum, Solana, and Berachain with batched transactions to reduce gas costs.
Collateral and Rehypothecation: Assets in BoringVaults are allocated across protocols for lending, staking, or liquidity provision, with rehypothecation enabling assets to be reused across multiple strategies to maximize yield. Collateral assets used for borrowing remain restricted to specific vaults, with Merkle proof-based rebalancing and multisig checks ensuring risk isolation.
Black Box Optimization: AI or strategist-driven algorithms dynamically allocate assets across protocols for optimal risk-adjusted yields.
Roles within the Veda Ecosystem
Veda’s multi-protocol vault ecosystem is supported by distinct roles that facilitate yield optimization, capital management, and cross-chain operations, ensuring efficient and secure vault performance.
Strategist: Strategists, often professional entities or AI-driven systems, design and execute yield strategies within BoringVaults. They allocate assets across protocols and chains, set risk parameters, and manage rebalancing, earning fees for optimizing risk-adjusted yields. Their decisions are subject to Merkle proof verification for transparency.
Depositor: Depositors provide liquidity to BoringVaults by depositing assets, earning yields from lending, staking, or liquidity provision across multiple protocols. Their role is passive, relying on Strategists for yield optimization, with shares minted via Teller contracts for withdrawal flexibility.
Operator: Operators manage the technical infrastructure for Veda’s cross-chain and multi-protocol operations, ensuring seamless asset transfers and protocol interactions. They maintain bridge and vault functionality, earning fees for operational reliability.
Multisig Signer: Multisig Signers, coordinated via protocols like Squads on Solana, authorize critical vault actions, such as strategy updates, fund transfers, or rebalancing. They enhance security by requiring multiple signatures but introduce coordination risks if keys are mismanaged.
Advantages
High Yields: Delivers 8-15% APY by optimizing across lending, staking, and liquidity provision, surpassing single-protocol yields.
Accessibility: Simplifies DeFi with one-click yield products, integrated into platforms like Binance Wallet.
Scalability: Cross-chain and protocol-agnostic design supports rapid strategy updates and new ecosystems.
Security: Battle-tested BoringVault with multiple audits and transparent risk controls.
Trade-offs
Complexity Risk: Multi-protocol strategies increase smart contract vulnerabilities.
Curator Risk: Reliance on strategists or AI for rebalancing may lead to suboptimal yields.
Liquidity Fragmentation: Cross-chain operations may dilute capital across ecosystems.
Multisig Coordination Risk: Veda employs multisig schemes, such as the Squads Protocol on Solana, to secure vault and bridge operations, requiring multiple signatures for actions like strategy updates or fund transfers. While this enhances security by preventing unauthorized changes, it introduces coordination delays and potential vulnerabilities if keys are mismanaged or concentrated among few parties.
2024 Exploit Impact: In August 2024, a $1.2M exploit in a BoringVault integration with a third-party protocol exposed a rebalancing bug, affecting 0.3% of TVL. Funds were fully recovered via white-hat efforts, and Veda implemented stricter Merkle proof verifications to prevent future exploits.
Comparative Analysis
The DeFi vault landscape spans lending, staking, perpetual futures, and multi-protocol strategies, each addressing distinct user needs and risk profiles. The table below compares Morpho, Euler, Maple, Symbiotic, Drift, Hyperliquid, and Veda based on category, TVL, Multichain capabilities, key advantage, and key risk, reflecting their latest performance and market positioning.