Vaults & Counterparty Risk

Earn connects users to a range of staking providers. Each provider operates under its own custody model, risk profile, and terms.

Understanding these differences helps you choose the vault option that fits your needs.

Non-custodial vaults

Some vaults use smart-contract-based systems to manage assets and issuerewards .

With these vaults:

• asset is supplied to the protocol’s smart contracts

• vault terms are enforced on-chain

• interest and terms follow protocol-defined rules

Considerations

Non-custodial lending carries technical and market risks, including:

• smart-contract vulnerabilities

• liquidity constraints

• protocol-specific parameters such as interest models or reward distribution

While these systems are transparent and on-chain, they still involve inherent risks.

Custodial vaults

Other vaults operate using a custodial model. In these cases, assets are held directly by the vault provider as part of the staking agreement.

Considerations

Custodial vaults introduces counterparty risk:

• asset safety depends on the provider’s operational practices and solvency

• staking terms and servicing follow the provider’s internal policies

• the provider decides how assets are managed and stored

Custodial providers may offer different rates or features, but users should evaluate the risks that come with centralized custody.

How Earn presents lenders

Earn does not hold assets on behalf of users. Instead, it provides access to supported vault providers and clearly shows whether a provider is:

• custodial

• non-custodial

• operating on a specific network

• offering a particular staking structure

This transparency allows you to choose a vault based on your own preferences, risk tolerance, and desired staking features.

Your responsibility as a staker

Before entering a vault, users should consider:

• the vault’s custody model

• the staking terms and conditions

• the risks associated with the type of vault selected

• how staking rewards may be affected by market volatility

Earn provides the information needed to make an informed decision, but the choice of vault and yield structure ultimately rests with the user.