AI-Managed Vaults
Tokenized yield strategies managed by AI — open to everyone
Underscore Vaults are AI-managed yield strategies wrapped into standard ERC-4626 tokens. Deposit assets, receive vault shares that represent your stake in an actively managed portfolio. The vault AI agent monitors yields around the clock — catching rate spikes, monitoring liquidity risk, claiming rewards, rebalancing across protocols — while you just hold the token.
Vaults are non-custodial. Your assets stay yours. Withdraw anytime, no permissions required.
The key difference from a normal Underscore Wallet: your position isn't locked. Vault shares are composable tokens you can use anywhere in DeFi — trade them, use them as collateral, bridge them cross-chain. The underlying AI strategy keeps running no matter where your tokens go.
Why Vaults Exist
The Origin Story
Vaults weren't designed in a vacuum — they emerged from real problems we hit while building.
We started with Hightop, where AI agents managed user portfolios through individual Underscore Wallets. The AI would analyze yields across DeFi, then rebalance each user's wallet to capture better opportunities. It worked, but we quickly ran into a wall: every optimization meant touching every wallet. If we wanted to move 10,000 users into a higher-yield Morpho market, that was 10,000 separate transactions. Expensive. Slow. The AI was doing the same work over and over for users who wanted the same outcome.
Then came Ripe Protocol. Users would borrow against their yield-bearing positions — Aave deposits, Morpho positions, and the like. But once those positions became collateral, they were locked. Even if a better yield opportunity appeared, users couldn't rebalance that collateral without first repaying their loan. Their yield-earning assets were stuck.
Both problems came from the same place: real users, real usage, real feedback. We felt the inefficiency firsthand running AI optimization at scale on Hightop.
So we built vaults. The core insight: keep everything we built with Underscore Wallets — the AI capabilities, the clear boundaries, the onchain rules and policies — but give the AI just one "wallet" to manage. Users deposit into a shared vault and receive tokens representing their share. The AI optimizes once, everyone benefits. And because vault shares are standard tokens, they can be used as collateral on Ripe while the AI keeps optimizing the underlying positions.
This architecture also opened the door to new vault types: leveraged strategies, index vaults, and more — all built on the same foundation.
Today, vaults are live and powering Hightop in production.
Scale
One vault, one rebalance, everyone benefits.
That's how we scale to millions of users.
Composability
Vault shares are standard ERC-20 tokens. This unlocks:
Collateral: Use vault shares on Ripe Protocol to get a loan — the AI keeps optimizing your collateral even while it's locked
Liquidity: Sell shares in liquidity pools for instant exit
Portability: Bridge cross-chain, use in other protocols
Integration: Any app can plug into vaults with a standard interface
Your position becomes a building block, not a locked asset.
Simplicity
Chasing yields is exhausting. Checking Morpho rates, comparing Aave markets, tracking Euler promotions, claiming rewards before they expire — it's a full-time job.
Vaults handle all of it. Users deposit, get a token, and earn yield. All the complexity — multi-protocol strategies, AI rebalancing, risk management, claiming and compounding rewards — happens behind the scenes.
Earn Vaults
Simple yield optimization for your assets.
How It Works
Deposit: Deposit USDC, ETH, or other supported assets into the vault
Receive Shares: Get vault tokens (e.g., _USDC) representing your share of the pool
AI Optimizes: The agent rebalances across approved protocols, vaults, and yield strategies
Withdraw Anytime: Redeem shares for underlying assets whenever you want
What the AI Does
The AI agent continuously optimizes the vault's positions:
Rate Monitoring: Watches yields across Morpho, Euler, Moonwell, Aave, Fluid, Compound, and other approved protocols
Risk Analysis: Evaluates strategies beyond just APY — analyzing depositor count, total deposits, utilization ratios, and available liquidity to assess withdrawal risk
Automatic Rebalancing: Moves funds to capture better risk-adjusted yields as conditions change
Reward Harvesting: Claims and compounds protocol incentives automatically
Example: USDC Earn Vault
You deposit 10,000 USDC:
Vault has 1,000,000 USDC total at $1.00/share
You receive 10,000 _USDC tokens
After 3 months:
AI executed dozens of rebalances — capturing rate opportunities, evaluating risk before moving, rotating through promotions, claiming rewards as they unlock
Vault now holds 1,025,000 USDC (2.5% growth)
Your 10,000 _USDC now redeemable for 10,250 USDC
No action required from you
Capital Efficiency with Ripe Protocol
Vault shares become premium collateral on Ripe Protocol. This unlocks powerful capital efficiency:
Deposit into an Earn Vault, receive _USDC
Use _USDC as collateral on Ripe to borrow stablecoins
Your collateral keeps earning — the AI optimizes yield in the background
Borrow and deploy those stablecoins elsewhere
Your collateral works 24/7. This isn't static collateral sitting idle — it's actively earning while you leverage it.
Leveraged Vaults
Higher yields through managed leverage on Ripe Protocol — with built-in debt safety.
How It Works
Leveraged Vaults amplify your yield by borrowing against your collateral, but with a key safety feature: borrowed funds always maintain USD-based exposure to ensure the vault can always repay its debt. The borrowed amount is also deposited back into Ripe as additional collateral, giving you two layers of collateral backing your debt — your original asset plus the borrowed USD.
Here's the full flow:
You deposit a volatile asset into the Underscore Leverage vault (e.g., cbBTC, ETH)
Vault deposits your asset into the corresponding Earn Vault (AI optimizes yield)
Vault uses those yield-bearing shares as collateral on Ripe Protocol
Vault borrows GREEN (stablecoin) against that collateral
Vault swaps GREEN to USDC
Vault deposits USDC into the USDC Earn Vault (more yield)
Vault adds those USDC vault shares as additional collateral on Ripe
The result: your original asset earns yield, AND the borrowed amount earns yield — but the borrowed portion stays in USD-denominated assets.
Yield Math: Leveraged cbBTC
Let's walk through the math with a $100,000 cbBTC deposit:
cbBTC in Earn Vault
$100,000
0.5%
+$500
Borrow from Ripe (70% LTV)
$70,000
3%*
-$2,100
USDC in Earn Vault
$70,000
8%
+$5,600
Net Yield
+$4,000
*Underscore Vaults receive discounted borrow rates (3% vs standard 6%)
Combined APY: 4.0% on your original $100k cbBTC — an 8x improvement over the base 0.5% yield, while maintaining full BTC exposure.
Why USD-Based Debt Matters
This design protects the vault from liquidation:
Borrowed funds stay in USDC — The vault cannot swap borrowed stablecoins into volatile assets like BTC or ETH
Debt is always covered — Even if your collateral (cbBTC, ETH) drops 50%, the borrowed USD portion maintains its value
No death spiral — The borrowed amount doesn't amplify losses from price drops
Example: Using the same $100k cbBTC deposit from above:
Vault borrows $70,000 in GREEN (70% LTV), swaps to USDC
cbBTC drops 40% → Your original collateral is now worth $60,000
But the $70,000 borrowed is still earning yield as USDC
That USDC is also deposited as collateral on Ripe — so you have $60k + $70k = $130k total collateral against $70k debt
Position remains healthy because borrowed funds didn't lose value AND they add to your collateral
Compare this to traditional leveraged positions where borrowed funds buy more of the volatile asset — those can cascade into liquidation.
What the AI Does
The AI manages both yield and risk:
Collateral Management: Deposits assets into Earn Vaults, then into Ripe Protocol
Strategic Borrowing: Borrows GREEN against collateral, then either swaps to USDC (if DEX liquidity is favorable) or stakes as Savings GREEN — either way, the borrowed amount earns yield
USD Exposure Only: Borrowed funds stay in USD-denominated assets (USDC or GREEN) — never swapped to volatile assets
Debt Ratio Monitoring: Maintains configurable maximum leverage
Automatic Deleveraging: Reduces positions when debt ratios approach limits
Risk Management
Leveraged vaults include built-in safety mechanisms:
USD-Only Borrowing
Borrowed funds maintain stablecoin exposure
Max Debt Ratio
Hard limit on leverage (e.g., 200% max)
Auto-Deleverage
Reduces positions as ratios approach limits
Withdrawal Safety
Automatically unwinds leverage for redemptions
Continuous Monitoring
AI watches health factor around the clock
Example: Leveraged cbBTC Vault
You deposit 1 cbBTC ($100,000):
Yield amplification:
Your cbBTC earns 0.5% in the cbBTC Earn Vault → +$500/year
Borrow cost at 3% (discounted rate) → -$2,100/year
Your borrowed $70k earns 8% in the USDC Earn Vault → +$5,600/year
Net yield: 4.0% — an 8x improvement over base yield
If cbBTC drops 40%:
Your cbBTC collateral: now worth $60,000
Your USDC collateral: still worth $70,000
Total collateral: $130,000 against $70,000 debt
Position remains healthy — no liquidation risk
Your risk exposure: Only the price movement of your original deposit (cbBTC). The leverage doesn't amplify your losses — it only amplifies your yield. If cbBTC drops 40%, you lose 40% of your initial value, same as holding cbBTC directly. The borrowed USD portion maintains its value and doesn't add downside risk.
Deposits & Shares
Making a Deposit
Approve the vault contract to spend your tokens
Call
deposit()with your desired amountReceive vault shares to your wallet
Share Price Calculation:
For the first deposit, 1 share = 1 asset. As the vault earns yield, share price increases.
Understanding Your Shares
Vault shares represent proportional ownership of everything in the vault:
100 shares at $1.00 = $100 claim on vault assets
Vault earns 10% yield = Share price rises to $1.10
Your 100 shares now worth $110 = You captured the yield
You don't need to claim rewards or rebalance. Your shares automatically reflect the vault's performance.
Withdrawing
Redeem shares for underlying assets anytime:
Call
redeem()orwithdraw()with your share amountAI automatically unwinds positions as needed
Receive underlying assets to your wallet
A small buffer (2%) ensures you receive your expected amount even during position unwinding.
Vault Safety & Controls
Approved Protocols Only
Each vault operates within strict boundaries — enforced by smart contracts, not company policies:
Whitelisted Destinations: AI can only deposit to pre-approved yield protocols
Registry Controlled: Underscore governance manages the approved protocol list
No Rogue Deposits: The AI literally cannot move funds to unapproved destinations — it's not a matter of trust, it's code
These rules are onchain. No rogue trades. No experimental farms. No hallucinations.
Deposit Controls
Vaults can implement additional safeguards:
Deposit Caps
Maximum total assets to prevent concentration
Allowlist Mode
Restrict deposits to approved addresses only
Pause Deposits
Temporarily stop new deposits if needed
Emergency Controls
For extreme market conditions:
Freeze Operations: Governance can halt all vault activity
Pause Withdrawals: Temporary hold during market stress (governance only)
Protected Funds: Even frozen, your share claim remains valid
Performance Fees
Vaults charge fees only on profits — never on your principal:
Rate: 20% of yield generated
Applied To: Profits only, not deposits
Transparent Tracking: Fees tracked separately from share mechanics
No Surprise Deductions: Your withdrawal reflects actual asset value
Example:
Vault earns $1,000 in yield
20% fee = $200 to protocol
$800 distributed to depositors via increased share price
See Protocol Economics for how fees are used.
Vaults vs User Wallets
Feature
Vaults
User Wallets
Ownership
Proportional shares (tokens)
Full control of assets
Management
AI-managed, hands-off
You + your managers decide
Customization
Fixed strategy per vault
Fully customizable
Composability
High (standard ERC-20)
Lower (assets in wallet)
Access
Anyone can deposit
Requires wallet deployment
Use as Collateral
Yes (shares are tokens)
More complex
Best For
Passive yield, composability
Active DeFi, custom strategies
Use Vaults When: You want set-and-forget yield, need composable/productive collateral, or want to participate without wallet setup.
Use Wallets When: You want full control, custom strategies, payment automation, or manager delegation with precise limits.
Real-World Examples
Passive Yield Seeker
Sarah has 50,000 USDC sitting idle. She wants yield but doesn't have time to monitor rates.
Solution: Deposits to USDC Earn Vault
Receives _USDC tokens instantly
AI captures yields across Morpho, Aave, Euler, and more.
Uses _USDC as collateral on Ripe to borrow for other opportunities
Her collateral earns yield while borrowed against
Result: Productive yield + productive collateral, zero management required.
Fintech App Integration
PayFlow is a payment app wanting to offer yield on user balances.
Problem: Building yield infrastructure from scratch requires significant engineering effort and security audits.
Solution: Integrates Underscore Vaults directly
Users deposit through PayFlow's interface
Vault handles all yield optimization
PayFlow tracks user shares internally
Standard ERC4626 interface, minimal integration work
Result: AI-managed yield without building yield infrastructure.
Leveraged Yield Strategy
Marcus wants amplified yield on his ETH without managing liquidation risk.
Solution: Deposits 20 ETH to Leveraged ETH Vault
ETH earns base yield in the ETH Earn Vault
Vault borrows USDC against his ETH (70% LTV) via Ripe Protocol
Borrowed USDC earns yield in the USDC Earn Vault
Borrowed funds stay USD-denominated — no amplified downside if ETH drops
AI manages rebalancing and debt ratios automatically
Result: ~8x yield improvement over base ETH yield, with risk exposure limited to ETH price movement only.
Common Questions
Can I withdraw anytime? Yes. Withdrawals are immediate — the vault automatically unwinds positions as needed to fulfill your request in a single transaction.
What if the vault loses money? Your shares reflect actual vault value. If underlying assets lose value (market movement, not AI error), share price decreases. Performance fees only apply to profits.
What assets can I deposit? Each vault specifies its underlying asset (USDC, ETH, etc.). You deposit that asset and receive vault-specific shares.
Are vault shares transferable? Yes. Vault shares are standard ERC-20 tokens. Transfer, trade, or use as collateral anywhere ERC-20 tokens are accepted.
What's the minimum deposit? No protocol-enforced minimum, though gas costs make very small deposits impractical.
Get Started
Ready to earn AI-optimized yield? Open the app →
Deposit directly: Connect your wallet and deposit into any vault
Track your position: Your vault shares appear in any ERC-20 compatible wallet
Use as collateral: Deposit shares to Ripe Protocol to borrow against your yield
Withdraw anytime: Redeem shares for underlying assets whenever you need them
Build on vaults: Integrate into your app via technical documentation
For full control over your DeFi strategy, explore User Wallets with custom managers, payment automation, and more.
Deposit. Earn. Compose.
Last updated