What is a Vault?
A vault is an automated financial strategy, where assets are deposited that could otherwise earn yield elsewhere. Vaults redirect deposited assets to those sources of yield, and Reaper Harvest-Bots automatically harvest earnings when profitable, and compound them back into the vault. The position grows passively and assets remain accessible at all times. At Reaper Farm, you may see vaults colloquially referred to as 'crypts'.
Each Reaper Vault consists of two smart contracts: a Vault Contract and a Strategy contract. Both exist on the blockchain and can be publicly verified by anyone.
Click the ‘More Info’ button on any vault and you will see links to the specific contracts like so:
The Vault contract secures and manages all deposits and withdrawals for all vault assets. This contract replaces an intermediary or custodian for your deposits. It is like a bank teller and a bank vault rolled into one.
The Strategy contract handles all the transactions that go into generating yield. It sells the rewards farmed with your assets, creates new LPs or underlying tokens, and re-deposits them into the Vault contract for you. If the Vault contract is the teller, the Strategy contract is your broker. It is the one doing the work of generating value for you.
All the gains on your deposit stay in the vault earning more and more return until you decide to withdraw. In most countries this is tax-efficient because no gain is realized until withdrawal.