# Core Concepts Ember Vaults are structured yield products that let users deposit assets into a vault and receive **receipt tokens** (shares) in return. The vaults are designed to support simple-click deposits, for the best-in-class single-asset yields curated by leading [risk managers](/ember-protocol/vault-managers.md). ### Yield Generation through your vault shares Overall, the yield accrual is all based on the receipt tokens (Share Price of the vault). * **Deposits:** When a user deposits a supported token (the **deposit coin**), the vault mints a corresponding amount of **receipt coins**. Initially, the exchange rate between deposit and receipt coins is **1:1**. For example, depositing 100 USDC into a new vault would mint 100 eUSDC (receipt tokens) back to the user. * **Yield Accrual:** Vault curators deploy the pooled deposits into various yield-generating strategies (DeFi, Cross-Chain, CeFi, etc.). As the vault generates yield, the total value of assets in the vault grows. Instead of the receipt coin balance increasing, the **exchange rate** between receipt coins and deposit coins rises over time. ***Example***: * At time of deposit: `1 receipt token = 1 deposit coin` * After strategies earn yield: `1 receipt token = 1.05 deposit coins` This design means users do not need to actively claim yield. Their **receipt coins become progressively more valuable** as the vault grows. * **Redemptions:** To withdraw, users redeem their receipt tokens back to the vault. Based on the current exchange rate, they receive more deposit coins than they initially deposited. For example, redeeming 100 receipt tokens after growth may return 105 USDC. ### Composability of your receipt tokens Once a user has his shares, he can also supply them on Lending markets for composable yield generation. At this moment, the shares will stop showing on the user's available token balances in their wallet, since they are deployed in another protocol. However, the Yield generation is still happening on both the receipt tokens (since their share price is increasing) and the Lending platform. ### **Fee Structure in Ember Vaults** Ember Vaults offer a simple yet powerful fee model that allows Curators to monetize their strategies while maintaining full transparency for users. Fees are embedded directly into the vault share price (the **vault exchange rate**) which is updated periodically based on real portfolio performance. Unlike systems that take fees by moving user funds, Ember's design ensures all fees are reflected through the vault's net asset value (NAV), keeping user deposits intact and maintaining accurate accounting across diverse DeFi, CeFi, and cross-chain strategies. *** #### **Performance Fee** The performance fee allows Curators to earn a share of the profits generated by their strategy. **Fee Rate:**\ A percentage of positive performance, calculated using the strategy's real underlying returns (tracked through the on-chain NAV), then applied on-chain through the vault's rate update. **When It Applies:** * Only during periods of positive performance — Curators do not earn performance fees when the vault is flat or negative. * Performance Fees are constantly baked into the share price but collected at the end of every month. **Control:** * The Curator sets the performance fee percentage. * Displayed transparently in the vault's fee configuration.
*** #### **Management Fee** The management fee provides Curators with recurring revenue for maintaining and executing their strategy. **Fee Rate:**\ Charged as an annualized percentage of assets under management (AUM), accrued continuously and reflected in the vault's share price. **Control:** * The Curator sets the management fee percentage. * Displayed transparently in the vault's fee configuration.
*** #### **How Fees Are Applied** Ember uses a **vault rate mechanism** (following ERC-4626 principles) to ensure that fees are applied cleanly and fairly: 1. The Curator's strategy performance is tracked off-chain using real portfolio data tracked on-chain and available to users on the vault UI. 2. At defined intervals, the Curator's operator updates the vault rate on-chain. 3. Management and performance fees are already embedded in this updated rate. 4. No user funds are moved — the share price simply reflects fees and performance. This design ensures: * Main depositor remains fully intact * Fees only come from yield, not user deposits * Accurate NAV accounting across chains and protocols * Consistent and predictable UX for depositors *** #### **Key Benefits of Ember's Fee Model** * **Simple for users** : Fees are baked into the vault return, no surprise deductions. * **Flexible for Curators** : Works seamlessly with DeFi, CeFi, AMMs, derivatives, and cross-chain strategies. * **Transparent** : All fee parameters are visible in the vault UI. * **ERC-4626-aligned** : Shares and rates operate like standard yield-bearing vaults for ease of integration. --- # Agent Instructions: Querying This Documentation If you need additional information that is not directly available in this page, you can query the documentation dynamically by asking a question. Perform an HTTP GET request on the current page URL with the `ask` query parameter: ``` GET https://learn.ember.so/ember-protocol/core-concepts.md?ask= ``` The question should be specific, self-contained, and written in natural language. The response will contain a direct answer to the question and relevant excerpts and sources from the documentation. Use this mechanism when the answer is not explicitly present in the current page, you need clarification or additional context, or you want to retrieve related documentation sections.