How to evaluate a yield vault

A yield vault is a smart contract that pools deposits in one token, such as USDC, and puts them to work under rules written into its code. Depositors receive shares whose value rises as the vault earns. Most stablecoin vaults lend: a vault curator chooses the lending markets, sets limits on each and charges a fee, and other roles move money between markets and step in when something breaks. The eight checks below follow the order an allocator usually works in, each with a worked example from the O2O Vault Brief, the O2O Research series that examines one vault per issue.

What pays the yield?

Look for the source of every point of yield: who pays it, and why they are willing to. In a lending vault, borrowers pay interest, and depositors receive that interest scaled down by utilization, the share of the money out on loan, minus the curator's fee. Rebuild the rate from the markets underneath and compare it with the rate the vault reports.

This matters because a yield that cannot be traced to a payer is a yield that cannot be judged. Borrower economics also set a ceiling: if the rate depositors want is higher than borrowers can afford, borrowers leave and the vault's own yield falls.

On 22 September 2026, a curated USDG lending vault lent into four funded markets where borrowers paid a blended 4.525% with 90.13% of the money out on loan, and its lending book paid depositors 4.06% with no fee taken. On those borrower economics, the most the lending could sustainably pay was close to 4.8%. O2O Vault Brief, Issue 1 rebuilds the rate market by market.

How much of the yield is a temporary reward?

Split the headline rate into base yield, what the lending or the assets pay after fees, and incentive yield, a reward paid on top from a budget. For each reward, find who funds it, its end date and its budget, and whether every depositor receives it or only some.

The reward decides what the vault pays on the day it ends. A depositor who chose the vault for its headline rate may be holding a much lower rate after that date, with the same risks.

Data table

rank_by_reward_share	project_in_source	pool_symbol	chain	tvl_usd	apy_base_pct	apy_reward_pct	apy_total_pct	reward_share_pct	o2o_research_example
1	morpho-blue	GTUSDGP	Arbitrum	53226482	2.108	5.866	7.974	73.6
2	morpho-blue	SENPYUSDMAIN	Ethereum	369231885	2.451	3.042	5.492	55.4
3	morpho-blue	SENRLUSDV2	Ethereum	465643968	3.095	2.577	5.672	45.4
4	morpho-blue	SIRLOINUSDC	Base	467661159	3.169	2.617	5.786	45.2
5	sentora-curator	PYUSD	Solana	108027531	3.542	2.413	5.954	40.5
6	morpho-blue	STEAKUSDG	Robinhood Chain	538016557	4.136	2.714	6.85	39.6	Steakhouse USDG
7	morpho-blue	SENPYUSDPRIMEV2	Ethereum	215385405	3.731	1.896	5.627	33.7
8	morpho-blue	SENPYUSDPST	Ethereum	74970655	4.583	1.704	6.287	27.1
9	morpho-blue	CSCBUSDC	Base	62519912	4.124	1.175	5.299	22.2	Clearstar cbAssets
10	morpho-blue	SKYMONEYUSDTSAVINGS	Ethereum	59333390	2.47	0.652	3.121	20.9
11	morpho-blue	HYPERUSDCA	Monad	53162905	6.758	0.828	7.587	10.9
12	morpho-blue	SPARKUSDC	Base	419639351	4.236	0	4.236	0.0
13	morpho-blue	GTUSDCP	Base	410019281	4.716	0	4.716	0.0
14	morpho-blue	STEAKEURCV	Ethereum	152275503	3	0	3	0.0
15	morpho-blue	STEAKUSDC	Base	145927682	4.718	0	4.718	0.0
16	sentora-curator	USDC	Ethereum	116704810	7.466	0	7.466	0.0
17	morpho-blue	STEAKUSDC	Ethereum	111596519	4.527	0	4.527	0.0
18	morpho-blue	GTUSDCP	Ethereum	105783014	4.509	0	4.509	0.0
19	morpho-blue	SPARKUSDTBC	Ethereum	84779250	3.614	0	3.614	0.0
20	morpho-blue	STEAKUSDT	Ethereum	77553064	3.804	0	3.804	0.0

On 22 September 2026, the same USDG vault showed depositors roughly 7%, topped up by a reward that ends on 1 July 2027. If its markets settle at the 90% utilization they are designed for, the vault's own yield would be about 3.65% after that date, a step down of roughly 343 basis points. O2O Vault Brief, Issue 1 sets out the campaign terms and the step down.

Can the vault return capital when you need it?

Look for how much a depositor can take out today: the cash the vault holds unlent, the cash it can pull from its markets at once, and any forced exit, a route that lets a depositor withdraw straight from a market, often for a penalty. Compare that amount with the size of the largest holders.

A vault can show a high rate and still be unable to pay everyone back on the same day. Withdrawals tend to come together, in the same market stress that makes lending riskier, so the liquidity that matters is the liquidity left on a bad day.

On 22 September 2026, the USDG vault had $32.6 million of instant liquidity plus $17.6 million that depositors could force out of its markets at a zero penalty, $50.3 million in all, or 10.2% of assets. Its ten largest holders held 1.15 times that amount. O2O Vault Brief, Issue 1 also notes that the vault supplied nearly all the money in each market it funded.

Who borrows, and against what collateral?

Look at the collateral in each market, the liquidation loan-to-value (LLTV) at which a loan can be liquidated, how concentrated the borrowers are and whether the collateral moves with crypto prices. A lower LLTV leaves a wider cushion before a loan goes bad; a higher one lets borrowers take more leverage.

The collateral is what repays depositors if borrowers do not. Collateral that rises and falls with the same crypto cycle can fall in every market at once, which is when liquidations and withdrawals arrive together.

On 9 October 2026, a curated USDC lending vault funded a market lending against a major crypto asset at an LLTV of 62.5%, so a borrower who posted $10,000 of collateral could be liquidated once the loan reached $6,250. When that asset's oracle price fell 5.6% on 8 October 2026, the vault's two markets lending against it and its staked version cleared 217 liquidations with zero bad debt. The vault's collateral as a whole had a 90-day correlation with bitcoin of about 0.98, so a deeper fall would test every market at once. O2O Vault Brief, Issue 2 covers each market and the October test.

How do prices reach the vault?

Find the oracle, the price feed each market uses to value its collateral. Check whether it reads a live market price, a fixed value or a price someone updates by hand, how often it updates and what happens if it stops.

A market can only liquidate a loan when its oracle shows the collateral has fallen. A feed that holds a price fixed, or lags the market, keeps bad loans open, and any shortfall falls on depositors as bad debt.

On 22 September 2026, the USDG vault's largest market, two-thirds of the book, used a feed that always returned a hard-coded par value, with a backup feed that took a deviation above 0.5% and a 16-hour challenge window to switch in. A second position of $31.4 million was priced by a feed updated by hand, last updated 32 days earlier. O2O Vault Brief, Issue 1 describes both designs.

Who can change the vault's settings?

List the roles and what each can do: the owner, the curator who chooses markets and limits, the allocators who move money between approved markets, and the sentinel who can cut a market's limit or pull money out in an emergency. Then check which changes wait out a timelock, a public waiting period before a change takes effect, and which take effect at once.

A depositor's protection against a bad change is the time to leave before it lands. Changes that add risk should wait; a fee change with no wait reaches depositors before they can react.

On 9 October 2026, the USDC vault made new markets, higher caps and new adapters wait three days, while fees, the forced-exit penalty and new allocators took effect immediately. Its fees could rise to the lending protocol's 50% cap with no wait, enough to cut the lending yield to about 2.4%. O2O Vault Brief, Issue 2 maps the roles and their signers.

What legal wrapper holds the assets?

Find out what a depositor owns: a share in a smart contract, a token issued by a company, or an interest in a fund. Then ask who holds the assets behind it, who can freeze or move them, what reports the depositor receives and what the depositor can do if something goes wrong.

The wrapper decides where a depositor stands when the code is not the only thing that matters: a frozen token, a failed issuer or a dispute over collateral held offchain.

The USDG vault examined on 22 September 2026 shows two layers. A quarter of its book was lent against a token that is a claim on a pool of institutional loans, whose collateral sits with custodians offchain and reaches depositors through the issuer's reports. The stablecoin's issuer can freeze tokens wherever they are held, so a frozen vault contract would lock the deposits inside it. O2O Vault Brief, Issue 1 covers the issuer and the collateral.

Who may deposit?

Check whether the vault keeps an allowlist, a list of wallets that passed identity checks and may hold or redeem its shares, and whether the checks sit in the contract or in an app in front of it. Check, too, whether every depositor earns the same rate.

Eligibility decides whether an allocator can hold the vault at all, and who it shares the vault with. A vault open to any wallet and a vault restricted to checked holders carry different risks of a sudden exit and different obligations for the allocator.

On 22 September 2026, the USDG vault's contract kept no allowlist: identity checks lived in the app that distributed it, and the reward went only to that app's users. An outside depositor earned the vault's own yield of roughly 4% while an app customer earned roughly 7%. O2O Vault Brief, Issue 1 explains how the vault's gates were set.

Red flags

• The vault reports a yield that the markets underneath cannot reproduce.
• A large share of the headline rate comes from a reward with an early end date, or with no stated end date at all.
• Same-day liquidity is small next to the largest holders, and the vault is the only lender in its markets.
• Collateral prices come from hard-coded or hand-updated feeds, or one feed prices most of the book.
• Most loans sit close to their liquidation point.
• Fees, penalties or new allocators can change with no timelock, or the same keys hold the curator and the sentinel roles.
• The vault does not say who can freeze the assets, what depositors own or where offchain collateral is held.
• The curator does not publish how it rates collateral, or how it handled past losses.

Questions to ask a curator or manager

• How is the current rate built, market by market, and what would it be without rewards?
• Who funds each reward, when does it end and what happens to the rate on that date?
• How much can depositors withdraw today, and how would a large withdrawal be met?
• What collateral does the vault accept, at what LLTV, and how does it behave in a crypto sell-off?
• Which oracle prices each market, and what happens if it stops updating?
• Which changes wait for a timelock, how long is it and who holds the keys for each role?
• What do depositors own, who holds the assets behind it and who can freeze them?
• Who may deposit, and do all depositors earn the same rate?

The checklist in one table

Compare the base yield after fees with SOFR for the same date (latest figure and source): the spread is what the vault pays for the risks this checklist covers. For how the main yield sources differ before any single vault is chosen, see stablecoin yield sources compared.