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 DarkAuto 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.
Vaults are the core of the DarkAuto ecosystem. In a DarkAuto vault, you earn more of the asset you stake in it, regardless if this is a liquidity pool (LP) token or a single asset. For example, vaults, where one can stake DARK-CRO LP, will result in more DARK-CRO LP over time, effectively growing your share in the liquidity pool and thus allowing for more and more fees and rewards over time.
When browsing the vaults on the platform, you will see the annual percentage yield (APY), which takes the frequent compounding into consideration compared to the 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 either refer to a pair of tokens invested in liquidity pools, such as VVS LP tokens within the VVS ecosystem.
In summarizing, vaults can:
Efficiently execute yield farming strategies.
Compound rewards into the initially deposited token amount.
Use any asset as liquidity.
Put any asset to work to generate a yield.
Reinvest earned profits.
Users can sit back and relax, and watch their investment grow!
How often do the vaults harvest their profits and reinvest them?
In DarkAuto, the auto-compound will happen every 30 minutes if the pending reward is at least $100. In case the pending reward is less than $100, it will be compounded automatically after a maximum of 4 hours.
Besides, the compound can be called manually anytime by clicking Compound on the vault interface.
Why can't someone just do this themselves?
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 DarkAuto we like to say: "Sit back and relax, the vault does all the work for you."
What is the vault fee structure?
Most vaults have a performance fee structure, taking 5% of harvest rewards for Official Vaults (except Zero Fees vaults), and 6.5% for Candidate Vaults. This fee on profits is split up:
Official vaults: 4% performance fee and 1% gas fee (compound every 30 minutes)
Candidate Vaults: 1% controller fee and 5.5% performance fee
These fees are already built into the APY of each vault and daily rate. You do not need to calculate these yourself.
What is harvesting on deposit?
Many of DarkAuto's vaults "Harvest on Deposit". This means that when you deposit into the vault, you are also calling the harvest function of the vault's strategy. By calling the harvest function, you trigger the collection of pending farm rewards and compounding those rewards back into the vault tokens for everyone.
Does the performance fee get taken out when I withdraw my funds?
No, the performance fees are on profits and are taken every time someone calls the harvest() function.
Does the vault page show the APY?
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, and 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. What you see is what you get!
What will I get out when I make a vault withdrawal?
You will always withdraw the token type that you deposited because at DarkAuto you earn what you stake. You will get the amount you deposited plus the yield generated.
How do LP vaults work?
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 them, buy more of the LP’s underlying assets, and then reinvest to complete the cycle.
This compounds the rewards gained from a liquidity pool. DarkAuto creates strategies that automate this process, saving you time and gas fees in comparison to farming manually.