# Tydro Vaults

Tydro Vaults are ERC-4626 compliant yield-bearing vaults that allow users to supply and withdraw ERC-20 tokens supported by Aave V3. Vaults manage the supply and withdrawal of assets in the Aave Protocol while enabling vault managers to take a fee on the yield earned.

To deploy a vault, clone and deploy from the [Aave Vault contract repository](https://github.com/aave/aave-vault/).

### Aave ERC-4626 Vaults

#### Overview

Aave Vaults follow the [ERC-4626 Tokenized Vault Standard](https://eips.ethereum.org/EIPS/eip-4626), which standardizes the interface for yield-bearing vaults. This standard simplifies integration with various applications and aggregators while improving interoperability across the DeFi ecosystem.

Each vault allows depositors to:

* Deposit supported tokens (assets) and receive vault shares in return
* Redeem vault shares for the underlying assets plus accrued yield
* Automatically earn yield from Aave V3 markets without direct interaction with the protocol

#### Architecture

Aave Vaults consist of three key components:

1. **ERC-4626 Interface**: Standardized methods for deposit, withdrawal, and accounting of assets.
2. **Yield Strategy**: Manages deposits into Aave V3 markets and handles yield accrual.
3. **Fee Management**: Enables vault managers to collect a percentage of the yield generated.

When a user deposits an asset into a vault:

* The vault mints proportional vault shares (ERC-20 tokens) to the user
* The vault deposits the underlying assets into the corresponding Aave V3 market
* The vault receives aTokens from Aave, which automatically accrue yield
* Yield is reflected in the increasing value of vault shares over time

#### Fee Structure

Vault managers can set a fee percentage on the yield generated by the vault. This fee structure includes:

* **Performance Fee**: A percentage of the yield earned that goes to the vault manager
* **Max Fee**: A maximum limit on the performance fee that can be charged
* **Fee Recipient**: The address that receives the collected fees

Fees are collected when yield is realized through:

* User withdrawals or redemptions
* Explicit fee collection by the vault manager

The fee is only applied to the yield portion of the assets and not to the principal amount deposited by users.

#### Interacting with Vaults

Vaults implement the standard ERC-4626 interface with methods such as:

* deposit(uint256 assets, address receiver): Deposit assets and receive vault shares
* withdraw(uint256 assets, address receiver, address owner): Withdraw assets by burning vault shares
* mint(uint256 shares, address receiver): Mint exact amount of shares by depositing assets
* redeem(uint256 shares, address receiver, address owner): Redeem shares for underlying assets

Additionally, vaults provide view functions to check:

* totalAssets(): Total assets managed by the vault
* convertToShares(uint256 assets): Convert asset amount to vault shares
* convertToAssets(uint256 shares): Convert vault shares to asset amount
* previewDeposit(uint256 assets): Preview shares received for a deposit
* previewWithdraw(uint256 assets): Preview shares needed for a withdrawal

For a detailed contract reference, see [here](https://aave.com/docs/smart-contracts/vaults).

#### Benefits for Users

* **Simplified Yield**: Earn yield from Aave V3 without managing multiple transactions
* **Gas Efficiency**: Lower gas costs compared to direct protocol interactions
* **Standard Interface**: Easier integration with other DeFi protocols and applications
* **Composability**: Vault shares can be used in other DeFi applications

#### Benefits for Vault Managers

* **Yield Capture**: Earn fees on yield generated by user deposits
* **Customization**: Configure fee parameters to suit different strategies
* **Standardization**: Leverage the ERC-4626 standard for broader integration


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