> For the complete documentation index, see [llms.txt](https://fiva.gitbook.io/unblock-finance-usdlock-documentation/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://fiva.gitbook.io/unblock-finance-usdlock-documentation/unblok-finance/uvaults.md).

# uVaults

## What is a Vault?

Vaults are investment instruments that employ a specific set of strategies for yield farming. They make use of automation to continually invest and reinvest deposited funds, which help to achieve increasingly higher levels of compound interest. By using uVaults it will to compound your earnings, saving you thousands of transaction gass fees to the network aswell  as precious personal time. Instead of manually harvesting and selling rewards, buying more tokens, and reinvesting that continuously, a vault does all that automatically.

Vaults are a sought after tool that many liquidity providers on farms look for in order to optimize yields.  In a unBlock Vault, you earn more of the asset you stake, regardless it being a liquidity pool (LP) token or a single asset. 

For example, vaults where one can stake BTC-ETH LP will result in more BTC-ETH LP over time, effectively growing your share in the liquidity pool and thus allowing for more and more fees and rewards over time.

Despite the name 'Vault' suggests, user funds are never locked in any uVault . One could always withdraw from a vault at any moment in time. unBlock Finance also does not own user funds staked in vaults. However, it is generally best to view vaults as "investment tools" to store funds for the medium to long term in order to have the effects of compounding really kick in.

When browsing the vaults on the platform, you will see the annual percentage yield (APY), which takes the frequent compounding into consideration compared to annual percentage rate (APR) which does not. You will also see daily interest percentages and the total amount invested in a vault by all users (TVL). Furthermore, one can see what underlying platform the vault is using as a source of revenue.

Each vault can either refer to a pair of tokens invested in liquidity pools, such as BTC-ETH LP tokens within the Ethereum ecosystem, or a single token invested in lending platforms or single stake reward pools. After depositing tokens to a vault, the user is supplied with vault specific mooTokens which represent their share in the vault. We will elaborate on mooTokens in the next section.

Anyone in the community can work together to build new strategies and submit them to the unBlock team for review. However, a new vault will not be accepted if the underlying platform does not adhere to the <mark style="color:blue;">unBlock Standards</mark>

Summarizing, vaults can:

* Efficiently execute yield farming strategies.
* Compound rewards into the initially deposited token amount.
* Use any asset as liquidity.
* Provide one asset as collateral for another.
* Manage collateral at a safe level to mitigate liquidation.
* Put any asset to work to generate a yield.
* Reinvest earned profits.

Users can sit back and relax, and watch their investment grow!

## **What are $LOCK tokens?**

A $LOCK token is an interest-bearing, tokenized proof of deposit that you will receive at the moment you deposit in an unBlock vault. A $LOCK token is unique per vault, e.g. you get $LOCK tokens when depositing ETH into the ETH Maxi vault. One can view $LOCK tokens as the receipt of your vault deposit.

{% hint style="info" %}
unBlock Finance users should hold on tightly to their $KEY tokens and not sell or exchange it, since you would lose ownership of your staked vault assets if you did so!
{% endhint %}

## How do $KEY tokens earn interest?

unBlock Finance vaults automatically create more of your deposited asset in the form of compound interest. By holding $KEY tokens in your wallet, they are increasing in value against its corresponding vault asset. The number of $KEY tokens in your wallet will remain constant, but the quantity of the vault tokens they can be redeemed for increases. This is also the reason why $KEY tokens  do not 1:1 match with the token amount initially deposited.

## How do I redeem $KEY tokens for the initially deposited tokens?

Whenever you want to withdraw the tokens that are staked for you in unBlock's Vaults, you simply initiate a withdrawal transaction to exchange them. The $KEY tokens are then taken from your wallet and burned, and your deposited assets plus yield will be given back to you.

## What are the advantages of the $LOCK system?

unBlock's $LOCK system has a few major advantages:&#x20;

1. $LOCK allow any user to withdraw their fair share of deposited funds;
2. the system allows you to deposit the $KEY tokens receipt to a cold or hardware wallet for ultimate safety;
3. your privacy is maintained, as you remain anonymous to unBlock Your funds in the vault are not tied to the wallet address from which you made the deposit, since the $KEY tokens are the only evidence of your share in the vault. Therefore, you could withdraw your share of funds from a different address if you moved your mooTokens to it;
4. $LOCK tokens may have tax benefits. Not only do our $KEY tokens make bookkeeping super simple, but since you're not selling off your rewards or receiving staking rewards direct to your wallet, (in many jurisdictions) you will not be incurring tax liabilities in the same way you would with farming your own yield; and
5. Lastly, $LOCK tokens can be used as interest-bearing collateral.

## **How often do the vaults harvest their profits and reinvest?**

Vaults are normally harvested multiple times daily and profits are automatically reinvested (compounded).&#x20;

## Why can't someone just do this themselves?

They could, but vaults help you save on personal time and transaction fees, maintain healthy collateral to debt ratios, self-optimize for the best possible yields, and automatically reinvest earnings. Attempting to do this manually would result in large inefficiencies.

## **What is the vault fee structure?**

Most vaults have a performance fee structure, taking a percentage cut of all harvest rewards. This fee on profits is split up and distributed back to BIFI stakers, allocated to unBlock Finance's treasury, sent to the strategist that developed the vault and sent to the one calling the vault's harvest function. These fees are already built into the APY of each vault and daily rate. You do not need to calculate it yourself. The performance fee and the fee structure breakdown are presented inside the Deposit and Withdraw module in a vault.

The performance fee on additional yield, i.e. vault profits, is largely distributed back to $LOCK stakers and is one of the main source of unBlock's platform revenue. A part of it also funds unBlock Finance's treasury which is used to further fund platform development, security and other initiatives. The performance fee was also implemented to promote community engagement and governance participation. A successful and engaged community is critical for our future growth, which in turn rewards platform users even more.

Furthermore, some vaults have a withdrawal fee. The main purpose of this fee is to prevent possible exploits from bad-faith actors. Without the fee, somebody could deposit just before the harvest() function execution and withdraw straight after that event, taking a % of the gains generated by legitimate stakers. Withdrawal fees stay in the vault and are shared amongst vault funds.

## What is harvesting on deposit?

Many of unBlock vaults "Harvest on Deposit". This means that when you deposit into the vault, you are also calling the harvest function of the vault's strategy. By calling the harvest function, you trigger the collection of pending farm rewards and compounding of those rewards back into the vault tokens for everyone.&#x20;

unBlock Finance does this so that it is impossible for malicious actors to steal yield, so a withdrawal fee is not required. This greatly benefits long-term investors.

Almost all of the vaults on more inexpensive chains like Fantom and Polygon harvest on deposit. You can tell if a vault harvests on deposit if there is no withdrawal fee.

For depositing, and thus calling the harvest function, you will receive a reward in the form of the native chain token (e.g. WFTM or WMATIC) due to the harvest call fee.

## **Does the performance fee get taken out when I withdraw my funds?**

No, the performance fees are on profits and are taken every time someone calls the harvest() function.

## Does the vault page show the APY?

Yes. Our displayed APY values reflect the predicted rate earned on a vault in a year. This rate is determined by the underlying platform it uses, the strategy that it is interacting with at the time, the total amount of funds in the vault and also takes into account the effect of compounding. As a unique feature, we have also included all vault fees in the APY calculation. What you see is what you get!

## What risks do the vaults have?

unBlock vaults are audited, but this does not mean that a vault is entirely risk free. Below are some of the general vault risks:

* Assets deposited into the vault have no risk of decreasing in quantity but can decrease in monetary value.
* As with any smart contract, the ultimate risk is that an investor's funds can end up stolen or unable to be withdrawn. The team does take steps to quantify the security risks of smart contracts and will only interact with ones that meet a specific set of requirements after excessive testing to make sure the underlying platform does not contain so called 'rug-pull' functions.

## **What are the different vaults?**

* **Money Market :** Utilizes lending platforms, such as Venus on BNB Chain or Scream on Fantom, to generate the highest possible yield for these coins (e.g. BUSD, BNB, LINK, DOT, DAI, USDT, ETH, or BTCB).&#x20;
* **Native Token Farming :** Takes advantage of the high yield on popular farms by depositing another asset to earn, sell and compound profits of the native reward token.

## What will I get out when I make a vault withdrawal?

You will always withdraw the token type that you deposited, because at unBlock you earn what you stake. You will get the amount you deposited plus the yield generated (minus a potential vault withdrawal fee).&#x20;


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