# How to evaluate a yield vault Source: https://o2ocapital.com/learn/how-to-evaluate-a-yield-vault Published: 2026-10-15 Updated: 2026-10-23 Data as of: 2026-10-15 Last reviewed: 2026-10-23 For information only: nothing on this site is an offer to sell, or a solicitation of an offer to buy, any security. Open to eligible non-U.S. institutional investors only. As of 15 October 2026, O2O Capital Partners is pre-launch: no vault or vault token is live. [Stablecoin treasury yield](https://o2ocapital.com/learn/stablecoin-treasury-yield) To evaluate a yield vault, an allocator checks what pays the yield and how much of it is a temporary reward, whether the vault can return capital on the terms it states, who borrows and against what collateral, how prices reach the vault, who can change its settings, what legal wrapper holds the assets and who may deposit. Each check covers a risk that a headline APY leaves out. By [Peter Gaffney](https://o2ocapital.com/team/peter-gaffney), Co-Founder, O2O Capital Partners; former Head of Research, Security Token Advisors O2O Research is general market commentary for information only. It is not investment advice, a recommendation or an offer of any security, including interests in any O2O vault. O2O may seek business relationships with protocols, curators or issuers it writes about. ## Key facts Each figure shows its source and the date it describes. - **SOFR, the dollar overnight benchmark**: 3.88%. As of October 14, 2026. Source: [Federal Reserve Bank of New York](https://www.newyorkfed.org/markets/reference-rates/sofr) ([latest figure and source](https://o2ocapital.com/research/data/onchain-vault-market#sofr)) - **Tokenized US Treasury yield**: 3.60% (7-day APY). As of October 15, 2026. Source: [RWA.xyz Treasuries](https://app.rwa.xyz/treasuries) ([latest figure and source](https://o2ocapital.com/research/data/onchain-vault-market#tokenized-treasury-yield)) 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. **Figure: What pays the yield.** Borrowers, the assets a vault holds and a reward budget pay into the vault; the curator's fee leaves and depositors keep the rest as base and incentive yield. Example: curated USDG lending vault, 22 September 2026. Alt text: Flow diagram from three payers (borrowers, held assets, reward budget) into a yield vault, with fees out and the yield reaching depositors after fees, plus four example figures from a USDG vault. 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](https://o2ocapital.com/research/steakhouse-usdg-vault-brief) 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. **Figure: Reward share of yield in the largest stablecoin vaults.** Base APY and reward APY for 20 curated stablecoin lending vaults with at least $50 million TVL, sorted by reward share. The two O2O Research example vaults are outlined. Data as of 23 October 2026, DefiLlama yields. Source: DefiLlama yields API, https\://yields.llama.fi/pools, retrieved 2026-10-23T03:51Z. Alt text: Horizontal stacked bars of base and reward APY for 20 stablecoin lending vaults, sorted from highest to lowest reward share, with two example vaults highlighted. | 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](https://o2ocapital.com/research/steakhouse-usdg-vault-brief) 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. **Figure: The liquidity ladder.** Exit liquidity comes in tiers, fastest first: unlent cash, cash pulled from markets at once, then a forced exit. Example: curated USDG vault, 22 September 2026, $50.3 million in all against ten largest holders at 1.15 times that. Alt text: Three stepped tiers of exit liquidity from unlent cash to forced exit, beside bars comparing a vault's $50.3 million of liquidity with its ten 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](https://o2ocapital.com/research/steakhouse-usdg-vault-brief) 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. **Figure: Who borrows, and the LLTV cushion.** A vault lends into a market where a borrower posts collateral. At an LLTV of 62.5%, $10,000 of collateral can be liquidated once the loan reaches $6,250. Example: curated USDC vault, 8 and 9 October 2026. Alt text: A vault lends to a market against collateral posted by a borrower, with a bar showing a 62.5% LLTV liquidation point on $10,000 of collateral and two example figures. 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](https://o2ocapital.com/research/clearstar-cbassets-vault-brief) 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. **Figure: How prices reach the vault.** Each market values collateral through an oracle: a live market price, a fixed value or a price updated by hand. Each can fail differently, and shortfalls fall on depositors. Examples from a USDG vault, 22 September 2026. Alt text: Three oracle types (live market price, fixed value, updated by hand) each leading to a failure mode, with a banner noting that shortfalls land on depositors as bad debt. 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](https://o2ocapital.com/research/steakhouse-usdg-vault-brief) 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. **Figure: Who can change the vault's settings.** A permissions grid for the owner, curator, allocators and sentinel, and which changes wait out a timelock. Example: curated USDC vault, 9 October 2026. Alt text: A grid of four vault roles and what each can do, followed by two panels listing changes that wait three days and changes that 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](https://o2ocapital.com/research/clearstar-cbassets-vault-brief) 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. **Figure: Layers from depositor to asset.** Ask what the depositor owns, who holds the assets behind it and who can freeze or move them. Example: curated USDG vault, 22 September 2026. Alt text: Stacked layers from depositor to wrapper options (smart contract share, company token, fund interest), to who holds the assets, to the assets including offchain collateral. 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](https://o2ocapital.com/research/steakhouse-usdg-vault-brief) 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](https://o2ocapital.com/research/steakhouse-usdg-vault-brief) 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 | Check | What to look for | Where to find it | | - | - | - | | What pays the yield | Borrower rates, utilization and fees that rebuild the reported rate | The vault's market list and each market's rates | | Temporary rewards | The reward's funder, end date, budget and who receives it | The reward campaign's published terms | | Liquidity | Unlent cash, forced exit terms and the size of the largest holders | The vault's holdings and holder list | | Borrowers and collateral | Collateral type, LLTV, borrower concentration and crypto correlation | Each market's settings and loan book | | Prices | Oracle type, update frequency and fallback | Each market's oracle contract | | Settings | Roles, signers and timelocks for each kind of change | The vault's role and timelock settings | | Legal wrapper | What depositors own, who holds the assets and who can freeze them | Offering documents and issuer terms | | Eligibility | Allowlist, identity checks and differences in the rate paid | The vault's deposit rules and the distributor's terms | **Figure: Eight checks for a yield vault.** The eight checks in the order an allocator usually works, with what to look for and where to find it. Alt text: A numbered scorecard of eight vault checks, each with what to look for and where to find it, and a closing note to compare base yield after fees with SOFR. Compare the base yield after fees with SOFR for the same date ([latest figure and source](https://o2ocapital.com/research/data/onchain-vault-market#sofr)): 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](https://o2ocapital.com/learn/stablecoin-yield-sources-compared). ## Sources 1. Federal Reserve Bank of New York, [Secured Overnight Financing Rate Data](https://www.newyorkfed.org/markets/reference-rates/sofr). Retrieved October 15, 2026. Data as of October 14, 2026. 2. RWA.xyz, [Tokenized U.S. Treasury Funds](https://app.rwa.xyz/treasuries). Retrieved October 15, 2026. ## Related - [Stablecoin treasury yield](https://o2ocapital.com/learn/stablecoin-treasury-yield) - [Stablecoin yield sources compared](https://o2ocapital.com/learn/stablecoin-yield-sources-compared) - [What is a NAV-priced vault token?](https://o2ocapital.com/learn/nav-priced-vault-tokens) - [What is tokenized private credit?](https://o2ocapital.com/learn/what-is-tokenized-private-credit) - [Steakhouse USDG Vault Brief: The Vault Behind Robinhood's Earn Tab](https://o2ocapital.com/research/steakhouse-usdg-vault-brief) - [Clearstar cbAssets Vault Brief: The $34 Million Vault Behind Coinbase's Solana Loans](https://o2ocapital.com/research/clearstar-cbassets-vault-brief) To report an error or ask about a source, use the [contact form](https://o2ocapital.com/?audience=other#contact).