Who calculates NAV, and how?
A NAV-priced vault token takes its price from the fund behind it. The fund's net asset value is its assets minus its liabilities. Divided by the number of shares in issue, it gives the NAV per share, the price at which investors join and leave the fund.
The calculation belongs to an independent fund administrator, a third party that keeps the fund's books separately from the manager who chooses the investments. The manager supplies information about the positions. The administrator checks it against bank, custody and loan servicing records, applies the fund's valuation policy and signs off the result.
Each calculation, often called a NAV strike, follows the same steps:
- List every asset the fund holds: loans, fund units, cash and interest that has been earned but not yet paid.
- Value each asset under the valuation policy in the fund's documents. Traded assets take a market price. Private loans, which have no market price, are usually carried at the amount owed less any expected loss, or at a value from a stated model.
- Subtract the liabilities: management and administration fees that have built up, other expenses, redemptions owed to investors who have already asked to leave, and any borrowing.
- Divide by the number of shares in issue.
The fund's documents set how often this happens: daily, weekly or monthly, depending on how easily the assets can be valued. An auditor reviews the fund's books and valuations each year.
Funds that hold tokenized Treasuries and those that hold tokenized private credit both use this method, and the Key facts box shows how much of each RWA.xyz tracks, with dates. The difference lies in the inputs: a Treasury bill has a market price every day, while a private loan's value rests on the administrator's method and the originator's reports.
How does NAV reach the chain?
A smart contract cannot read the administrator's report. Something has to write the NAV onto the blockchain, and that is the job of an oracle, a service that posts outside data where contracts can use it.
Designs vary, but each answers the same questions:
- Who may post. The administrator may sign the NAV itself, the fund may run an updater, or a third-party oracle network may publish it. The contract accepts updates only from approved signers.
- What is posted. Usually the NAV per share and the time of the strike, so contracts can tell how old the price is.
- What checks run. Many feeds reject an update that moves the price more than a set amount, or flag a price that has not been refreshed within the expected window.
- What happens between strikes. Some vaults hold the price flat until the next strike. Others add the expected interest day by day and let the next strike correct the estimate.
A holder reads the price feed's rules alongside the fund's documents. The feed shows when the last NAV arrived, who signed it and how far the onchain price can drift before someone notices.
How does a vault token map to a fund share?
Most terms in a fund have a direct counterpart in a vault. The table pairs them.
| Fund term | Vault equivalent | Who does it |
|---|---|---|
| Share | Vault token | The fund issues it; the token contract records who holds it |
| Subscription | Deposit | The investor sends stablecoins; the fund issues shares at the next NAV |
| Redemption | Redeem request | The holder asks to leave; the fund pays out at a later NAV |
| NAV strike | Price update | The administrator calculates the NAV; the oracle posts it |
| Administrator | Oracle feed | The administrator values the fund; the feed carries the result onchain |
| Register | Allowlist | The fund keeps its register of investors; the token contract checks a list of identity-verified wallets |
The token is the fund share in a form that smart contracts can hold, count and move. The fund's documents still decide what a share is worth and who may own one. A transfer to a wallet outside the allowlist fails, which keeps the onchain record in line with the fund's register of approved investors.
How do NAV pricing and market pricing differ for collateral?
A NAV-priced vault token can also serve as collateral: a holder posts it in a lending market and borrows stablecoins against it. The lending market then needs a price for the token, and there are two ways to set one.
NAV pricing
The lending market reads the fund's NAV per share from the oracle feed. The price moves on strike dates, reflects the administrator's valuation of the fund's assets, and is hard to push around by trading. Its weakness is speed: a loss in the fund appears only when the next strike records it, and the fund may take weeks to pay out a redemption, so a lender that seizes the collateral may wait to turn it into cash.
Market pricing
The lending market reads the price at which the token trades on exchanges or in liquidity pools. The price moves with every trade and shows what a buyer would pay today. When holders want to leave faster than the fund redeems, the market price can fall below NAV. When trading is thin, a small trade can move it far, which creates room for manipulation.
A lending market that accepts the token chooses one method, or combines them, and sets how much can be borrowed against it with the method's weaknesses in mind. How to evaluate a yield vault covers the questions to ask about any vault's price feed.
How do deposits and redemptions settle at NAV?
A fund that strikes its NAV on a schedule cannot price a deposit until the next strike, and it may not have cash on hand to pay a redemption at once. So deposits and redemptions in a NAV-priced vault are usually requests that settle later.
The usual cycle for a deposit:
- The investor sends stablecoins to the vault with a deposit request, before the fund's cut-off time.
- The request waits while the fund converts the stablecoins and invests them.
- At the next strike, the administrator sets the NAV and the vault fixes how many tokens the deposit buys.
- The investor claims the tokens.
A redemption runs the same way in reverse. The holder hands over tokens with a redemption request, the fund raises cash from repayments or cash it holds, the next strike fixes the amount, and the holder claims the stablecoins. Many funds add a notice period, or a gate that limits how much can leave in one period, so that redemptions do not force the sale of loans.
ERC-7540 is the Ethereum standard for this request-then-claim pattern. It extends the ERC-4626 vault standard so a request can wait as pending, become claimable once the vault settles it, and then be claimed. The ERC-7540 page on eips.ethereum.org, retrieved 15 October 2026, notes that the price can change between a request and its claim, which is why the number of tokens or stablecoins is fixed only at settlement. ERC-7540 explained walks through the lifecycle and compares the standard with ERC-4626 and ERC-7575.
What are the risks?
NAV pricing gives a vault token a clear valuation method. The risks of the assets behind it remain, and the method adds some of its own:
- Valuation risk: private loans have no market price, so the NAV rests on the administrator's method and on information from the originator, and it can be slow to record a loss.
- Timing risk: when a loss is known but not yet in the NAV, holders who redeem first leave at the higher price and those who stay bear the loss.
- Oracle risk: the onchain price is only as current and as accurate as the feed, and a wrong or late update reaches every contract that reads it.
- Liquidity risk: redemptions wait for the next strike and for cash, and a gate can stretch the wait when many holders ask at once.
- Pricing gap: where the token also trades, its market price can sit below NAV for long periods, which matters to anyone who must sell before the fund pays out.
- Request risk: the ERC-7540 text, retrieved from eips.ethereum.org on 15 October 2026, warns that assets or shares locked in a request can be stuck in the pending state, and that the final exchange rate depends on the vault's own implementation.
- Smart contract and administrator risk: the vault's code and the administrator's processes both have to work as documented.
What is tokenized private credit? covers the credit risks in the loans that most NAV-priced vault tokens hold.