> ## Documentation Index
> Fetch the complete documentation index at: https://docs.tiltprotocol.com/llms.txt
> Use this file to discover all available pages before exploring further.

# Vault Architecture

> ERC-4626 vaults, base asset, share pricing, and NAV calculation

# Vault Architecture

Every fund on Tilt Protocol is an **ERC-4626 vault** — the standard interface for tokenized vaults on Ethereum. This means Tilt vaults are composable with the broader DeFi ecosystem.

## Core Design

Each vault holds a basket of ERC-20 tokens (representing stocks, ETFs, or crypto) denominated in a single **base asset**: tiltUSDC (a USDC-equivalent stablecoin on Robinhood L2).

```
Vault (ERC-4626)
├── Base Asset: tiltUSDC
├── Held Tokens: [tiltAAPL, tiltNVDA, tiltTSLA, ...]
├── Target Weights: [3000, 2500, 2000, ...] (basis points)
├── Shares: represent proportional ownership of all vault assets
└── Fees: entry, exit, management, performance
```

## Share Mechanics

### Deposits

When an investor deposits tiltUSDC:

1. Entry fee is deducted (sent to `FeeManager`)
2. Shares are minted proportional to current NAV: `shares = (deposit * totalShares) / totalAssets`
3. Deposited funds are held as `unallocatedDeposits` until allocated into the portfolio

### Withdrawals

When an investor withdraws:

1. Shares are burned
2. The vault calculates the proportional claim on all held assets
3. Held tokens are auto-liquidated via `TokenRouter` to return tiltUSDC
4. Exit fee is deducted
5. Net tiltUSDC is returned to the investor

Withdrawals are **never paused** — investors can always exit regardless of vault state.

### NAV Calculation

```
totalAssets = tiltUSDC balance
            + Σ (held_token_balance × token_price_in_USD)
            for each token in the portfolio
```

Token prices are sourced from the `TokenRouter` oracle. Share price is simply `totalAssets / totalShares` in 18-decimal precision.

## Dead Shares

The first 1,000 shares of every vault are minted to `address(1)` (burned permanently). This prevents the classic ERC-4626 inflation attack where a first depositor manipulates share pricing through donation.

## Allocation and Rebalancing

Vaults maintain two distinct operations:

**Allocation** — deploys idle tiltUSDC into target positions:

* Called via `allocateIdleAssets()` (permissionless — anyone can trigger it)
* Buys target tokens proportional to their weight
* Only uses unallocated base asset; doesn't sell existing positions

**Rebalancing** — realigns the portfolio to match target weights:

* Sells over-weight tokens, buys under-weight tokens
* Restricted to authorized callers (curator or `RebalanceEngine`)
* Configurable minimum interval between rebalances

## Vault Upgrades

Vaults are deployed as `BeaconProxy` instances, allowing the protocol to upgrade vault logic without redeploying individual vaults.