# Vaults

Nest vaults are the foundation of the protocol. Each vault is a non-custodial smart contract that holds diversified, yield-generating assets. They’re designed to be transparent, compliant, and composable—powering both individual users and DeFi applications.

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### What Is a Vault?

A **Nest vault** is a smart contract that:

* Mints vault tokens in exchange for stablecoins
* Allocates funds to a selection of tokenized RWAs
* Accrues yield via asset performance
* Allows users to redeem vault tokens for their underlying value

Vaults are **fully onchain**, **audited**, and **non-custodial**—meaning Nest never takes control of your funds.

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### Understanding APY in Nest Vaults

Each vault displays an **Estimated APY**—a forward-looking projection based on the strategy’s asset mix and past performance data, including offchain activity from real-world assets. This figure helps users assess the expected return, but it is not guaranteed and may fluctuate over time.

In the **early stages of a vault’s lifecycle**, returns can vary significantly as capital flows in, positions are established, and the strategy stabilizes. During this period, short-term yield may differ from long-term expectations.

To promote transparency, we also calculate and monitor the **Current APY**, which reflects actual yield earned onchain over the past 7 days. While not shown as the primary figure, this data is available for users who want deeper insight into recent performance.

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### Understanding Vault NAV

Vaults are priced with a Net Asset Value (NAV).  The vault NAV is calculated based on the total value of all assets held within the vault (stablecoins, liquidity buffer, underlying assets) on all chains the vault operates on.

An automated process checks the price of vault assets every hour to see if there have been update which necessitate a vault NAV update. To protect against pricing errors or oracle attacks, price updates are bounded to an upper and lower limit. 

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### Related Pages

* [Browse Active Vaults](https://docs.nest.credit/about/available-vaults)
* [Understand Liquidity & Redemptions](https://docs.nest.credit/about/liquidity-and-redemptions)
* [See the Assets Behind Vaults](https://docs.nest.credit/about/assets)