MVP3 min read·Just now--
How Do Concrete Vaults Actually Work?
1️⃣ Imagine you just opened a DeFi app and decided to try out Concrete vaults.
You deposit your funds into a vault.
In return, you receive something called vault shares.
Then you notice new terms popping up:
eRate
NAV
And your balance… starts changing over time.
Naturally, the question is:
“What exactly is happening to my money?”
This article breaks it down in a simple, intuitive way — no complex jargon, just clear mental models.
2️⃣ Vault Shares & eRate (Made Simple)
When you deposit into a vault, you don’t just leave your money there — you own a piece of the vault.
That ownership is represented by vault shares.
Think of it like this:
The vault is a big pie
Your shares are your slices
If the pie grows bigger, your slices become more valuable — even if the number of slices you hold stays the same.
That’s where eRate comes in.
eRate = the value of each share
When the vault earns yield, the total value increases
Your number of shares stays the same
But each share is now worth more
So instead of your balance increasing in quantity, it increases in value per share.
3️⃣ NAV Without the Jargon
Now let’s simplify NAV.
NAV (Net Asset Value) = the total value of everything inside the vault
It includes:
All user deposits
All generated yield
All active positions
Using the same analogy:
NAV = the entire pie
Shares = your slices of that pie
If the vault performs well:
NAV increases
The pie gets bigger
Your slices become more valuable
So even if you don’t add more funds, your position grows because the vault itself grows.
4️⃣ Why Time Matters
This is where many people misunderstand DeFi vaults.
Vaults are not designed for quick in-and-out trades.
They’re built for time-based growth.
Why?
Because:
Strategies take time to generate yield
There are execution costs (gas, fees)
Capital needs time to be deployed efficiently
Markets fluctuate in the short term
Think of a vault like a garden 🌱
You plant seeds (deposit funds)
The system waters and maintains them (strategies)
Over time, they grow and produce results
If you leave too early, you miss the harvest.
Time unlocks the full value of automated compounding.
5️⃣ Active Management (Not Just Sitting Idle)
One key thing to understand about managed DeFi is:
Your funds are not just sitting in a wallet.
They are actively being:
Deployed across strategies
Rebalanced as markets change
Optimized for better returns
Think of the vault like a professional chef 👨🍳
You provide the ingredients (capital)
The chef decides how to cook (strategies)
They adjust the recipe over time (rebalancing)
This is called onchain capital deployment — your funds are constantly being put to work in the best available opportunities.
6️⃣ Connecting It All to Outcomes
Now let’s tie everything together.
Here’s what’s happening behind the scenes:
Your deposit becomes vault shares
The vault puts capital to work across strategies
Yield is generated and added back into the vault
NAV increases
eRate rises
Your shares become more valuable
At the same time:
The system rebalances to capture better opportunities
Profits are reinvested through automated compounding
Over time, this creates a powerful effect:
👉 Growth isn’t just from yield
👉 It’s from how that yield is managed and compounded
The longer you stay, the more you benefit from:
Compounding
Optimization
Strategy execution
7️⃣ A Simple Mental Model
Let’s simplify everything into one clean picture:
Vault = pooled capital system
Vault shares = your ownership
NAV = total vault value (the whole pool)
eRate = value per share
Time = growth driver
Management = optimization layer
If you remember this, you understand how Concrete vaults work.
Concrete vaults turn complex DeFi strategies into a simple experience:
You deposit.
The system manages.
Your value grows over time.
That’s the power of managed DeFi.
🚨 Explore Concrete at app.concrete.xyz 🚨
