How Do Concrete Vaults Actually Work?

You open a DeFi app, deposit your funds into a vault, and suddenly you see new terms appear — vault shares, eRate, and NAV. Your balance starts changing over time… but you didn’t actively do anything.

So what’s actually happening under the hood?

Let’s break it down in the simplest way possible.

1️⃣ Starting From Your Perspective

As a user, the process feels straightforward:

• You deposit funds into a vault
• You receive vault shares
• You see metrics like eRate and NAV
• Over time, your balance grows

But naturally, questions come up:

• What exactly do these shares represent?
• Why does the value change?
• Where is the yield coming from?

To understand this, we need to zoom into how vaults actually work.

2️⃣ Vault Shares & eRate — Your Slice of the Pie

Think of a vault like a large jar of capital.

When you deposit money:

• You’re adding to the jar
• In return, you get shares of that jar

👉 These vault shares represent your ownership.

Now comes eRate (exchange rate):

• eRate tells you how much each share is worth
• At the beginning, 1 share might equal 1 unit of value
• Over time, that value increases

💡 Simple analogy: Imagine you own slices of a pizza. At first, each slice is small. But as the pizza grows bigger, your slice becomes more valuable — even though the number of slices you own stays the same.

That’s exactly how shares and eRate work.

3️⃣ NAV — The Total Pool Value

Now let’s talk about NAV (Net Asset Value).

In plain language:

• NAV = total value of everything inside the vault

This includes:

• Your deposit
• Everyone else’s deposits
• All the yield generated

💡 Mental model:

• NAV = the whole jar
• Shares = your portion of the jar

So when:

• NAV increases → the vault grows
• Your shares stay the same → but become more valuable

That’s why your balance increases without you doing anything.

4️⃣ Why Time Matters ⏳

Here’s the part many people overlook:

Vaults are not designed for quick in-and-out moves.

Why?

Because:

• Strategies take time to generate yield
• There are costs (gas fees, execution, rebalancing)
• Markets fluctuate in the short term
• Withdrawals are structured for stability

💡 Think of it like planting a garden:

• You don’t plant seeds and expect instant results
• Growth happens gradually
• The longer you wait, the more it compounds

In the same way: 👉 Time allows yield to accumulate and compound 👉 Short-term movements don’t reflect true performance

5️⃣ Active Management — Not Just Sitting Idle

Concrete vaults aren’t passive storage.

They actively manage your capital.

Behind the scenes:

• Funds are deployed across strategies
• Positions are adjusted based on market conditions
• Capital is rebalanced for better opportunities

💡 Analogy: Think of the vault like a professional chef:

• Ingredients (your funds) are constantly being used
• Recipes (strategies) are adjusted
• The goal is to create the best outcome over time

So instead of your money sitting still, it’s being actively optimized.

6️⃣ How This Creates Better Outcomes

When everything works together:

• Automated compounding grows your position
• Rebalancing captures better opportunities
• Onchain capital deployment keeps funds productive
• Active management adapts to changing markets

The result?

👉 You don’t just earn yield 👉 You benefit from how that yield is managed

And over time, this makes a big difference.

7️⃣ A Simple Mental Model (Keep This)

Let’s simplify everything:

• Vault = pooled capital system
• Shares = your ownership
• eRate = value of your shares
• NAV = total vault value
• Time = growth driver
• Management = optimization layer

If you understand this, you understand how DeFi vaults — and specifically Concrete vaults — actually work.

🚀 Final Thought

Concrete vaults take the complexity of DeFi and turn it into a simple experience:

You deposit → receive shares → and let the system work for you.

But under the surface, it’s a powerful combination of:

• Managed DeFi
• Automated compounding
• Intelligent capital deployment

👉 The longer you stay, the more the system works in your favor.

🔎 Explore Concrete at: app.concrete.xyz