# Octant introduces Yield-Donating Vaults as part of Octant v2 Source: https://x.com/OctantApp/status/1945897680732884998 Kiwi News: https://news.kiwistand.com/stories/Octant-introduces-Yield-Donating-Vaults-as-part-of-Octant-v2?index=0x6879342cf46a0e5ecf5e10065a3e06f35d567961bc8c931b3aabe74386bfa95536bdaebd Submitted by 0x7CdA...2FED on 2025-07-17 UTC, 7 upvotes, 0 comments ## Summary Octant has introduced Yield Donating Vaults as part of Octant v2, extending Yearn's V3 tokenized strategy framework so that generated yield goes to ecosystem development instead of depositors. Depositors keep their principal, which can be withdrawn at any time, while all profits are tokenized as ERC-20 shares and transferred to a designated allocation mechanism address. That address is implemented as a payment splitter contract managed by the organization that deployed the vault, forming a node in a funding graph that distributes to ecosystem development initiatives. The vaults have management, keeper and emergency admin roles, with the keeper triggering harvests through "report" functions. ## Article If you’ve been taking a deeper dive into v2, you’ve probably heard the term “vaults”. So what are they and how’re we changing the game with them? Let’s get into it. First a little crash course history. Let’s start with vaults. What are they? Vaults are smart contracts that can store and manage assets such as crypto. Every vault always has the tokens it generates as a form of returns. These generated tokens can later be exchanged for tokens that were originally locked in vaults. And why are vaults important? Because they changed the game for DeFi in 2022. At the time, devs had issues integrating tokens from different protocols. To integrate each protocol token, you needed to research their accruing yields, models, and adjust them to your code base. It was time-consuming, stressful, and worst of all, risky. That’s where ERC-4626 came in. It standardized tokenized vaults to make protocol integration easier and less risky. By standardizing deposits, withdrawals, and accounting functions across DeFi protocols. This was a huge improvement in making composability and making integrations less complex. Next, Yearn Finance leveled up ERC-4626. In Yearn’s V2, stand-alone contracts would be attached to a specific vault each, and that vault was the only one allowed to deposit or withdraw funds from the strategy. But, in V3, they leveled up by introducing tokenized strategies in their V3 architecture. This meant fully ERC-4626-compliant stand-alone vaults but with more functionality and features. Though their job remained the same (i.e., generate yield from one external source), strategies could now be connected to many different vaults simultaneously and deposited directly into by an end user. They decoupled vault accounting from investment logic by introducing a separation between vault functionality (handling user deposits/withdrawals) and strategy implementation (managing yield generation). This innovation allowed for multiple strategies per asset and introduced a profit-sharing mechanism between strategists, vault users, and protocol treasuries. Pretty cool right? That’s where Octant v2 comes in. We’re extending Yearn’s frameworks with our own flavor. Our twist? All of Yearn’s tokenized strategy framework with a big modification: instead of distributing profits among depositors, all the generated yield is tokenized as ERC-4626 shares and transferred to a designated allocation mechanism address. This creates a perpetual contribution mechanism for ecosystem expansion, collaborative initiatives, or protocol development while preserving depositor principal. Why is this such a big deal? Because this transforms conventional yield-bearing vaults into capital-preserving growth engines WITHOUT having to sacrifice the battle-tested security, standardization, and composability of the underlying ERC-4626 and Yearn v3 architecture. We’re introducing Yield Donating Vaults Our approach to DeFi comes with a growth perspective. Our Yield Donating Vaults separate capital preservation from yield generation and distribution. This allows users to maintain their principal investment while directing all generated yield toward fueling ecosystem growth and driving impact. These vaults function similarly to standard yield-bearing vaults but with a critical difference: instead of compounding returns for depositors, all profits are tokenized as ERC20 shares and automatically transferred to a designated allocation mechanism address. This model enables passive contribution. Without requiring active management from depositors, our model allows capital to preserve user value while simultaneously empowering builders, contributors, and aligned initiatives. Each yield donating vault operates with distinct roles that ensure proper governance and operational security. The management role can configure strategy parameters and adjust operational settings. The keeper role is responsible for triggering harvests through "report" functions that realize profits and losses. The emergency admin role can execute emergency withdrawals in the event of protocol risks. Under the hood, what appears as a simple donation address is actually implemented as a payment splitter contract managed by the organization that deployed the vault. This splitter forms a node in a funding graph, creating distribution edges to various ecosystem development initiatives. Users interacting with the vault deposit principal which is protected and can be withdrawn at any time, while the flow is managed transparently through this onchain allocation mechanism. This mechanism creates a perpetual value stream for contributors and builders as long as users maintain deposits in the vault and the underlying protocol generates yield. Flexible, easy, and ready to earn/split/scale. Want to use our vaults? Get in touch. It's time to fuel your own growth engine.