Learn · DeFi
Vault accounting: what does your receipt represent?
A share records your fraction of a vault. It is not a promise to return the original deposit. Gains can raise the assets behind each share; losses and fees can reduce your claim.
Generic, illustrative accounting inspired by tokenised vaults. All values are fictional, computed in this browser. No wallet or real assets.
Separate the token from the receipt
Imagine a shared pool of tokens. Your receipt tells you what fraction belongs to you. In a vault, that receipt is called a share. Its value changes when the tokens behind it change. It also does not promise that those tokens are ready to withdraw.
Optional: calculate tokens per share
The token the vault manages is its asset. Net asset value (NAV) per share means total assets divided by total shares here, measured in tokens rather than dollars.
If 1,000 shares are backed by 1,100 assets, each share represents 1.10 assets. A new deposit of 110 assets mints 100 shares in this simplified model. Total assets become 1,210 and shares become 1,100, preserving 1.10 assets per share. A deposit changes size; it is not itself investment profit.
Keep the receipt; change what backs it
Advance one month and watch your receipts, their token value and the amount available now. Repeat with loss and liquidity stress. The optional ledger lets you try a new deposit or a withdrawal afterwards.
Your receipt stays; its backing can change
Illustrative · computed hereYou deposit 1,000 tokens and receive 1,000 shares: receipts for your fraction of the pool. Predict: if the pool loses tokens, do the same receipts still get your original deposit back? Advance one month to compare the receipts, their value and cash available.
Your receipts (shares)
1,000.00
Your claim in tokens
1,000.00
0.00 tokens gained or lost, including withdrawals
You can withdraw now
1,000.00 tokens
Your receipts currently represent your original tokens. Choose a situation, then advance the month.
This generic ledger assumes a fictional 1% gross gain; the loss case also removes 20% of assets. It does not simulate the activity earning that gain. A lending vault earns from borrowers; another strategy has its own return source and risks. A 20% fee on positive net gain is paid in new shares. These are teaching parameters, not a quoted return or a Morpho fee formula.
Optional: inspect the full ledger, deposit or redeem
- Vault assets
- 1,000.00
- Total shares
- 1,000.00
- Your shares
- 1,000.00
- Fee recipient shares
- 0.00
- Assets per share (NAV)
- 1.000000
- Your net claim
- 1,000.00
- Your immediately withdrawable amount
- 1,000.00
- Already withdrawn to wallet
- 0.00
- Claim + withdrawn
- 1,000.00
- Cash alternative: total contributed
- 1,000.00
NAV = vault assets ÷ total shares. Your claim = your shares × NAV. Fee shares dilute your fraction; the fee does not remove tokens from this model. Withdrawable = the smaller of your claim and available vault cash. Cash comparison assumes zero yield and retains the underlying token’s risks.
Transaction ledger
- Start: deposit 1,000 assets → mint 1,000 shares.
Open the optional ledger and try redeeming 1,000 shares under stress: the claim exists but cash is insufficient. A rejected action changes no balances. Deposits add cash; successful redemption burns shares so they cannot be spent twice. Fractional arithmetic omits token rounding, virtual shares, gas, donation attacks and entry/exit fees.
Gross gain, net claim and cash are different
In the normal preset, 1,000 assets earn 10. The fee recipient receives shares worth 2 assets, leaving your claim at 1,008. Total vault assets remain 1,010, but your fraction is smaller. Under the loss preset, 10 of gain cannot offset 200 of principal loss: 810 assets remain and no performance fee is charged in this model.
Fee structures differ by vault. A fee may be paid in assets or shares, and may apply to assets under management, performance, entry or exit. This model charges on one positive net period gain, has no high-water mark and applies the period once. It does not reproduce a specific vault’s implementation.
Optional: the ERC-4626 vault interface
ERC-4626 specifies a common interface for single-asset tokenised vaults. Deposit specifies assets and receives shares; mint specifies shares and pays assets. Withdraw specifies assets and burns shares; redeem specifies shares and receives assets. Conversion estimates do not establish that the vault can honour that withdrawal now.
Real implementations account for integer rounding, limits, fees and sometimes virtual shares or assets. The standard does not guarantee a return, liquidity or protection against strategy and smart-contract loss. A vault denominated in one token also retains that token’s purchasing-power risk.
Primary reference: ERC-4626 specification: shares, conversion, previews and limits.
Explain it back
You hold half of a pool. Its assets fall from 600 to 480 tokens, and only 30 tokens are available now. Without changing your receipts, can your claim still be 300? Can you withdraw the whole claim today? Explain why.
Compare your explanation
Half of 480 is 240 tokens. Your receipts still represent half, but the pool is smaller. Only 30 tokens are ready cash, so the full 240-token claim cannot be withdrawn now. Ownership, value and availability are three different things.