Encyclopedia DeFi · Entry 68
Yield vaults: shares, strategies and the meaning of redemption
In this article
At a glance
Key facts
| Fact | Detail | Source |
|---|---|---|
| Interface | ERC-4626 defines assets, shares, deposits and withdrawals. | [1] |
| Limits | Maximum operations and previews have distinct semantics. | [1] |
| Rounding | Share conversions and donation effects need careful implementation. | [2] |
Shares divide a changing pool of assets
Consider a simplified vault with 1,200 underlying units and 1,000 shares. Before fees and rounding, one share corresponds to 1.2 underlying units. Depositing 120 units at that ratio would create 100 shares, leaving 1,320 units backing 1,100 shares.
If the strategy later loses assets, the share claim can shrink. The existence of a standard interface does not specify what the strategy owns, which counterparties it uses or what authority can alter it.
A conversion estimate is not a withdrawal guarantee
ERC-4626 separates informational conversions from previews and maximum operation limits. For example, a conversion can express an idealized share-to-asset relationship while an operation preview accounts for the relevant transaction semantics and fees.
The amount redeemable now can also be limited. A displayed accounting value should not silently be treated as immediately withdrawable cash. Integrations need the actual method’s defined behavior rather than whichever number produces the most attractive display.
Small-unit arithmetic matters at the edges
Deposits and withdrawals round according to their operation’s rules. When a deposit would receive very few share units, rounding can become economically significant. Direct donations can also change the ratio between assets and outstanding shares in some implementations.
OpenZeppelin documents the resulting inflation-attack concern and a mitigation design. That documentation does not certify every vault claiming ERC-4626 compatibility. An assessment must include the deployed implementation, strategy, limits, fees and underlying dependencies.
Direct answers
Questions people ask
Does ERC-4626 compliance mean the yield is guaranteed?
No. It standardizes an interface for tokenized vaults. The strategy can lose assets, fees can apply and withdrawals can be limited. Those properties require examination beyond the interface.
Inspect the evidence
The answer and key facts have stable claim links. These records retain the scope and qualification when reused.
A yield vault pools deposited assets into a strategy and records users’ claims as shares. ERC-4626 standardizes a common asset-and-share interface, not the strategy’s safety or return. A share’s conversion value, realizable withdrawal and market price can differ, particularly when limits, fees or losses apply.
Scope: DeFi. Verification: verified · 2026-10-02T15:08:18.373Z.
Link to this claimInterface: ERC-4626 defines assets, shares, deposits and withdrawals.
Scope: DeFi. Verification: verified · 2026-10-02T15:08:18.373Z.
Link to this claimLimits: Maximum operations and previews have distinct semantics.
Scope: DeFi. Verification: verified · 2026-10-02T15:08:18.373Z.
Link to this claimRounding: Share conversions and donation effects need careful implementation.
Scope: DeFi. Verification: verified · 2026-10-02T15:08:18.373Z.
Link to this claimRevision history
- — First publication after primary-source research and independent automated verification.
Source register
Sources and references
Retrieval dates and locators are recorded individually.- ERC-4626: Tokenized VaultsEthereum Improvement Proposals
Vault shares, assets, previews, withdrawal limits and rounding.
Locator: Specification; Security Considerations · Version / scope: ERC-4626 final · Retrieved: 2026-10-02Open source - ERC-4626 security considerationsOpenZeppelin
Share conversion, rounding and donation-based exchange-rate manipulation.
Locator: Security concern: Inflation attack; Custom behavior · Version / scope: OpenZeppelin Contracts 5.x · Retrieved: 2026-10-02Open source
Research and drafting use AI assistance. A separate automated review checks claims against primary sources; no external expert or named human review is implied. Publication, substantive editing, source retrieval and verification are recorded separately. This version was independently checked by an automated reviewer on 2 October 2026.
Editorial method and correctionsDegrees of Satoshi editorial project. “Yield vaults: shares, strategies and the meaning of redemption.” Published 2026-10-02; updated 2026-10-02. https://degreesofsatoshi.com/encyclopedia/yield-vaults/