# How Do Concrete Vaults Actually Work? By [Aida](https://paragraph.com/@aidaaidada) · 2026-03-28 --- You deposit into a vault. You receive shares. And after some time, your position is worth more. That is the user experience in one line. But if you are new to **Concrete vaults**, that simple flow can still feel confusing once you look at the dashboard. You see **vault shares**, **eRate**, and **NAV**, and the obvious question appears: What is actually happening under the hood? The short answer is that a vault is not just holding your assets. It is putting them to work. Concrete is part of a broader category of **DeFi vaults** where capital is pooled, actively managed, and deployed onchain with the goal of producing yield over time. So when you deposit, you are not only adding funds to a balance. You are entering a system of **managed DeFi** and participating in shared **onchain capital deployment**. Once that clicks, the rest becomes much easier to understand. The moment after the deposit ---------------------------- From the outside, everything looks simple. A user deposits assets into a vault. In return, they receive shares. Then they check back later and notice that the position has changed in value. That part makes intuitive sense. The confusing part is the language around it. Instead of just showing a bigger token balance, the vault shows ownership through shares and tracks value through metrics like **eRate** and **NAV**. For a new user, that can feel like extra complexity. But it is really just a better way of describing what is going on. A vault is a shared system. Many users deposit into the same pool. Because of that, the vault needs a clean way to track who owns what while the capital inside the pool is constantly being managed. That is why the interface focuses on ownership and value, not just on the raw deposit amount. Shares as ownership ------------------- The easiest way to understand **vault shares** is to stop thinking in terms of isolated tokens. Imagine a large fund with many participants. Nobody is pointing to one exact coin and saying, “that one is mine.” Instead, each participant owns a fraction of the whole pool. Shares represent that fraction. That is what vault shares are. They are not random points. They are your claim on the vault. If you own 2% of all the shares, then you own 2% of the vault. It does not matter if the vault moves funds, rebalances positions, or compounds returns behind the scenes. Your claim remains tied to your share of the whole system. This is why shares matter so much in **Concrete vaults**. They let the vault stay active without losing track of user ownership. The role of eRate ----------------- Once shares make sense, **eRate** becomes much more intuitive. If shares tell you how much of the vault belongs to you, eRate tells you how much each share is worth. That is the key relationship. A user may hold the same number of shares for weeks or months, but the value of those shares can rise if the vault is doing its job well. In other words, the position can grow even if the share count itself does not change. A simple way to think about it is owning a fixed number of units in an asset that becomes more valuable over time. The number of units stays the same. The value represented by each unit rises. That is what eRate is capturing. So if someone asks what eRate really means, the clean answer is this: it is the value per share. That is why it matters. NAV without the finance fog --------------------------- **NAV** is another term that sounds more complicated than it really is. In plain English, **NAV** is the total value of the vault. That total includes the capital users deposited plus whatever value the vault has added or lost through its strategy activity. If the vault earns, compounds, or repositions well, NAV can grow. If there are costs or weaker market conditions, NAV reflects that too. The simplest mental model is: NAV is the full pool. Shares are your piece of the pool. That is all most users need to remember. If the overall pool becomes larger in value, then your slice becomes more valuable too. That is why NAV and share value are so closely connected. One tells you how big the vault is. The other tells you what your ownership inside that vault is worth. Time as part of the mechanism ----------------------------- This is where a lot of users underestimate how vaults work. Vaults are not built for instant gratification. They are built to work over time. That is not just a philosophical point. It is mechanical. Strategies need time to generate yield. **Automated compounding** needs time to show its full effect. Rebalancing and optimization need time to outweigh the costs of execution. In **DeFi vaults**, good results often come from allowing the system to operate long enough for its design to matter. A useful analogy is a flywheel. In the beginning, it takes effort to get moving. But once it has momentum, the system becomes more efficient and more powerful. Vaults often work in a similar way. At first, the progress may feel modest. Over time, compounding and active management can make the position much more meaningful. This is also why short-term observation can be misleading. Looking at a vault too early can miss the whole point of how it is built. Active management, not passive storage -------------------------------------- Another important part of the story is that the vault is not passive. A Concrete vault is not just a digital box where capital sits untouched. It is an actively managed system. That means the capital inside can be deployed, adjusted, rebalanced, and redirected as conditions change. This is what makes **managed DeFi** different from simply holding an asset in a wallet. The vault is trying to improve capital efficiency. It is not only asking, “Can this capital earn?” It is also asking, “Where should this capital be now? When should it move? How should it be positioned?” That management layer is a major part of the value proposition. The yield does not just appear out of nowhere. It comes from decisions, structure, and ongoing **onchain capital deployment**. Where the growth comes from --------------------------- Once you connect the parts, the full picture becomes clear. Users deposit capital into a shared vault. They receive shares that represent ownership. The vault deploys pooled capital into strategies. Those strategies generate outcomes over time. As the vault’s total value changes, the value of each share changes too. That is the engine. And over longer periods, the engine becomes more powerful because of compounding. Returns can stay inside the system and continue working. Rebalancing can help the vault adapt. Better capital allocation can improve results. So users benefit not only from yield itself, but from the way that yield is managed. That is an important distinction. The real appeal of **Concrete vaults** is not just “deposit and earn.” It is “deposit into a system designed to manage earning well.” The mental model that makes everything click -------------------------------------------- If you strip away the jargon, the model is actually very simple. A vault is pooled capital. **Vault shares** are your ownership. **NAV** is the total value of the pool. **eRate** is the value of each share. Time gives the strategy room to work. Management makes the capital more effective. That is the whole structure. So when someone asks how Concrete vaults actually work, the best answer is this: you deposit into a managed pool, receive shares that represent your portion of it, and let the vault handle active **onchain capital deployment** on your behalf. As the vault grows, the value of your shares can grow with it. That is why time matters. That is why **NAV** matters. That is why **eRate** matters. And that is why **Concrete vaults** are more than just a place to park assets. **Explore Concrete at** [**app.concrete.xyz**](http://app.concrete.xyz) --- *Originally published on [Aida](https://paragraph.com/@aidaaidada/how-do-concrete-vaults-actually-work)*