--
How Do Concrete Vaults Actually Work?
You deposit into a vault.
You receive shares.
Over time, your balance grows.
Simple on the surface.
But if you’re new to DeFi vaults, you might be wondering:
What do terms like vault shares, eRate, and NAV actually mean?
And how is your money really growing?
Let’s break it down in the simplest way possible.
Start With the User Experience
Imagine you deposit funds into one of the Concrete vaults.
Immediately, you receive something called vault shares. Your dashboard now shows:
• Number of shares you own
• eRate
• NAV
At first glance, it can feel confusing.
You might ask:
“Why don’t I just see my money increasing directly?”
“What exactly are these shares?”
To understand this, you need to think of the vault as a shared pool of capital.
Vault Shares & eRate (Made Simple)
Think of a vault like a large jar filled with money.
When you deposit, you don’t just add money and you receive a slice of that jar.
That slice is your vault share.
• The more you deposit, the more shares you own
• Your shares represent your ownership of the vault
Now, what about eRate?
eRate is simply the value of each share.
At the beginning, 1 share might equal $1.
Over time, as the vault earns yield, each share becomes more valuable.
So instead of your number of shares increasing, the value of each share increases.
That’s how your balance grows.
Understanding NAV Without Complexity
Now let’s talk about NAV (Net Asset Value).
NAV is just a fancy way of saying:
“What is the total value of everything inside the vault?”
Going back to our jar example:
• NAV = total money in the jar
• Shares = how many slices the jar is divided into
If the vault performs well, the total value (NAV) increases.
And when NAV increases, each share becomes worth more.
So your ownership stays the same — but what you own becomes more valuable.
Why Time Matters
This is one of the most important ideas to understand.
Vaults are not designed for quick, short-term gains.
They work best over time.
Why?
Because:
• Strategies need time to generate yield
• There are costs involved (like gas and fees)
• Markets move in cycles
• Compounding takes time to show results
Think of it like planting a garden.
You don’t plant seeds today and expect a harvest tomorrow.
You water it, give it time, and let it grow.
The longer your capital stays in the vault, the more it benefits from automated compounding and strategy execution.
Short-term movements may happen, but long-term participation is where real growth occurs.
Active Management Behind the Scenes
Another important thing to know:
Vaults are not passive.
Your funds are not just sitting there.
Behind the scenes, the vault is actively managing capital through onchain capital deployment.
You can think of it like a skilled operator managing a system.
The vault:
• Allocates funds across different strategies
• Rebalances positions when needed
• Adjusts based on market conditions
• Optimizes for better outcomes over time
This is what makes it managed DeFi.
Instead of you doing all the work, the system handles it for you.
How This Benefits You
When you combine everything, something powerful happens.
Your capital is continuously deployed
Rewards are reinvested automatically
Better opportunities are captured over time
Risk is managed within the system
This leads to more efficient growth.
You’re not just earning yield but you’re benefiting from how that yield is managed.
And over time, that difference matters a lot.
A Simple Mental Model
Let’s simplify everything into one clear picture:
• Vault = a shared pool of capital
• Vault shares = your ownership in that pool
• eRate = the value of each share
• NAV = total value of the vault
• Time = what allows growth to happen
• Management = the system optimizing everything
Once you understand this, DeFi vaults become much easier to use
