A yield vault issues shares instead of tracking each depositor's balance separately. The share price rises as the underlying strategy earns, and that single number is what converts a pooled position into an individual result.
Shares are a claim on the whole pool
When a depositor sends assets, the contract mints shares equal to the deposit divided by the current share price. Every existing holder owns the same fraction of the pool after the deposit as before it.
Only two figures matter: the total assets the vault controls and the total shares outstanding. Their ratio is the share price, recalculated whenever either number changes for any reason.
No tokens are credited to individual accounts as yield accrues. A depositor's position grows because the shares already held are worth more, not because anything arrives in the wallet.
Why earnings appear as a rising ratio
Strategy income lands in the vault contract, increasing total assets while the share count stays fixed. The ratio moves up, and every share gains proportionally at the same instant.
This is why a vault position shows no incoming transfers on a block explorer. The wallet holds the same share balance it always did, and the accounting sits inside the vault.
Withdrawal reverses the arithmetic. Shares are burned and the depositor receives assets equal to their share count multiplied by whatever the price is at that moment.
Losses move the price in the same way
A strategy that loses value reduces total assets without touching the share count, so the price falls. The mechanism is symmetric and does not distinguish between gains and shortfalls.
That symmetry matters because it means loss is socialized across all holders present when it is recognized. Nobody is individually assigned the position that went wrong.
Timing therefore affects outcomes. A deposit made shortly before a loss is recognized absorbs part of it, even though the deposit had nothing to do with the underlying exposure.
Why deposits and withdrawals are priced carefully
If the share price is stale when a deposit is processed, the depositor either receives too many shares or too few. Both cases transfer value between users silently.
Vaults address this by settling pending income before minting or burning, so the price reflects current holdings. Some designs add a delay between requesting a withdrawal and receiving assets.
Fees complicate the picture further. A performance fee that mints new shares to the manager dilutes holders slightly, which is a different mechanism from deducting assets from the pool.
What the share price does not tell you
A rising share price says income exceeded costs over the period. It says nothing about where the income came from or what exposures produced it.
Two vaults with similar price histories can hold entirely different risk. One may lend against liquid collateral while another writes options or supplies liquidity in volatile pairs.
Reading a vault therefore means reading the strategy contract and its permissions, not the share chart. The chart is a summary of results, not a description of what the vault does.