Troves Fundamentals
Troves is a vault-based system that lets users access structured DeFi yield on Starknet without managing complex strategies themselves. Instead of juggling multiple protocols, positions, and risk parameters, users deposit assets into Troves and let vaults handle execution, rebalancing, and risk.
This section breaks down how Troves works, where yield comes from, and how to read vault metrics correctly.
What Is Troves?
At its core, Troves is a vault layer that abstracts complex DeFi strategies into simple deposit-and-withdraw positions.
Vaults vs Strategies vs Positions
Understanding these three layers helps clarify how Troves works:
Vaults
Vaults are user-facing products. When you deposit into a Trove, you’re entering a vault. Each vault has a defined objective, risk profile, and asset flow.
Strategies
Strategies are the underlying logic that vaults execute. A strategy may involve lending, borrowing, liquidity provision, looping, or a combination of actions across multiple protocols.
Positions
Positions are the actual on-chain states created by strategies—borrowed assets, LP tokens, collateral balances, and debt. Vaults curators (e.g. Unwrap Labs, Re7 Labs) manages these positions on behalf of users.
Users interact with vaults. Troves handles strategies and positions.
How Troves Abstracts Complex DeFi Actions
Normally, earning yield in DeFi requires users to actively move assets across multiple protocols, manage collateral ratios, monitor liquidation risk, rebalance positions as market conditions change, and pay transaction fees at every step. For example, a user trying to earn yield on BTC might need to stake BTC, borrow against it on a lending market, deploy the borrowed assets into an LP, and continuously adjust leverage and ranges to avoid liquidation or inefficiency—each action requiring manual oversight and onchain transactions.
Troves abstracts this complexity by bundling these multi-step actions into a single vault with predefined strategy logic. Instead of managing positions directly, users deposit once into a Troves vault, which then automatically executes the underlying strategy, rebalances exposure, and enforces risk parameters at the vault level. For instance, a levered xWBTC vault can handle borrowing via money markets, maintain safe collateral ratios, and rebalance positions as needed without user intervention. The outcome is one deposit that unlocks structured, risk-bounded yield, removing the need for continuous management while keeping capital efficiently deployed.
Where Yield Actually Comes From
Yield in Troves vaults generally comes from a combination of:
LP Fees
Trading fees from liquidity provision or
Supply or Staking yield
Supply capital to lending pools or stake to earn yield
Borrowing Spreads
The difference between what a strategy earns and what it pays in borrowing costs.
Most vaults blend these sources rather than relying on a single yield driver.
Understanding Vault Metrics
Before depositing, it’s important to understand how to evaluate a Trove vault.
APY vs APR
APR (Annual Percentage Rate)
Represents the base rate of return without compounding.
APY (Annual Percentage Yield)
Includes the effect of compounding over time.
Vaults that auto-compound will typically show higher APY. Yield shown by Troves is mostly APY.
TVL (Total Value Locked)
TVL measures the total assets deposited in a vault.
Higher TVL can indicate trust and adoption
Extremely high TVL may reduce marginal yields
Very low TVL may imply higher volatility or execution risk
TVL is a signal, not a guarantee.
Utilization
Utilization reflects how actively a vault’s capital is deployed.
High utilization → capital is working efficiently
Low utilization → idle capital, potentially lower returns
Balanced utilization is often preferable to extremes.
Risk Labels
Troves tries to be as transparent as possible.
Note: Risk labels and breakdowns are informational, not guarantees. Users should evaluate each vault’s specific risk sources, particularly market and impermanent loss exposure, and choose strategies aligned with their own risk tolerance.
Closing Note
Troves is designed to make advanced DeFi strategies accessible without hiding the underlying mechanics. Understanding these fundamentals helps move from passive participation to informed contribution.
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