How Do Concrete Vaults Actually Work?
You deposit into a vault.
You receive shares.
Your balance grows over time.
Sounds simple.
But if you’re new to DeFi — or even new to Concrete vaults — you might be wondering:
What do things like vault shares, eRate, and NAV actually mean?
Let’s break it down in the simplest way possible.
Starting From the User Experience
Imagine this:
You deposit funds into a vault.
Immediately, you receive vault shares. Over time, you notice your balance increasing. You also see terms like eRate and NAV changing.
At first glance, it can feel confusing.
But underneath it all, the system is actually very logical.
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” — you receive a slice of the jar.
That slice is your vault share.
Now, instead of your number of shares increasing, what actually grows is the value of each share.
This is where eRate comes in.
Vault shares = your ownership in the vault
eRate = the value of each share
As the vault generates yield, the value of each share increases.
So even if your number of shares stays the same, their value grows over time.
Understanding NAV Without Complexity
Next is NAV, which stands for Net Asset Value.
In simple terms:
NAV = total value of everything inside the vault
Using the jar analogy:
NAV = the total amount inside the jar
Shares = your slice of the jar
When the vault earns yield, the total value (NAV) increases.
And since you own a portion of that pool, your share becomes more valuable.
Why Time Matters
One of the biggest misunderstandings in DeFi is expecting instant results.
But vaults are not designed for short-term use.
Why?
Because:
Strategies need time to generate yield
There are execution costs (like gas and fees)
Rebalancing happens over time
Markets move in cycles
A simple way to think about it:
A vault is like planting a garden.
You don’t plant seeds today and harvest tomorrow. You give it time to grow, compound, and mature.
The longer your capital stays in the vault, the more it benefits from automated compounding and optimized strategy execution.
Time is what unlocks the full value.
Vaults Are Actively Managed
Another important point:
Vaults are not passive.
Your capital isn’t just sitting there — it’s being actively deployed.
Think of the vault like a skilled operator managing funds behind the scenes.
It:
Allocates capital across strategies
Rebalances when opportunities change
Adjusts based on market conditions
This is what makes it managed DeFi.
Instead of manually chasing opportunities, the system handles onchain capital deployment for you.
How This Benefits You
When everything works together, the results become clear:
Automated compounding grows your capital over time
Rebalancing helps capture better opportunities
Active management reduces the need for manual effort
Time enhances overall performance
You’re not just earning yield.
You’re benefiting from how that yield is generated, managed, and optimized.
A Simple Mental Model
Let’s bring it all together:
Vault = pooled capital system
Vault shares = your ownership
eRate = value of your shares
NAV = total vault value
Time = growth driver
Management = optimization layer
Once you understand this, everything becomes much clearer.
Concrete vaults are not just tools for earning yield.
They are systems designed to manage capital efficiently over time.
🚨 Explore Concrete at app.concrete.xyz 🚨

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