# A vault is not an account you own

> Deposit into a strategy, or keep the assets and grant a bounded permission. Both are called non-custodial. Only one leaves you holding the position.

- Source: https://defiloops.com/blog/a-vault-is-not-an-account-you-own
- Published: 2026-05-26
- Category: Architecture
- Tags: comparison, custody, vaults, instadapp
- Author: DeFiLoops

---
There are two ways to have software manage a DeFi position for you, and they look almost
identical from the outside. Both are usually described as non-custodial, and in the sense
that matters to a lawyer, both often are.

They are not the same thing, and the difference shows up on the day you want out.

## The two shapes

<Compare left="Deposit into a strategy" right="Appoint an agent on your account" verdict>
  <Fragment slot="left">
    You send assets to a vault. The vault runs a strategy and issues you a share. The
    position belongs to the strategy; you hold a claim on it.
  </Fragment>
  <Fragment slot="right">
    Assets stay in an account you own. You grant a bounded permission to act on it. The
    position is yours the whole time.
  </Fragment>
</Compare>

Both can be built entirely from on-chain contracts with no third-party custodian. The first
is still a different arrangement, because what you hold is a share of a pool rather than the
position itself.

## A concrete example of the first shape

[Instadapp's Fluid Lite](https://lite.guides.instadapp.io/) is a good one to look at,
because its documentation is clear about the structure rather than hiding it.

<Spec title="Fluid Lite, from its own guides" rows={[
  ['What it is', 'An all-in-one yield platform: leveraged staking, automated yield optimisation, cross-protocol routing, from one interface'],
  ['Who owns the position', 'Strategy contracts own and manage the DeFi Smart Accounts. Each DSA represents one position'],
  ['Custody', 'All fund operations execute in on-chain smart contracts, with no third-party custody'],
  ['Chains', 'Strategies run across Ethereum, Arbitrum and Plasma'],
  ['Fees', '20% performance fee on profits, a 0.05% exit fee to the DAO, and a 5bps withdrawal fee'],
]} />

Note the second row, because it is the whole point of this page and it is stated plainly in
their own docs: **the strategy contract owns the smart account**. That is not a criticism —
it is the correct design for a vault, and it is what lets one strategy manage many
depositors efficiently.

It does mean the thing you own is a share, not the position.

<Callout type="note" title="This is a real trade, not a trick">
  A vault gives you a strategy run by people who do it full time, gas costs amortised across
  everyone, and nothing to operate. Those are genuine advantages, and for most people most of
  the time they are worth more than direct ownership.
</Callout>

## What the difference actually changes

Four things, and only some of them will matter to you.

<Spec rows={[
  ['Getting out', 'A vault exit is a redemption: subject to the strategy’s liquidity, its exit fee, and whatever it has to unwind. Your own account is a transfer you sign'],
  ['What you hold', 'A share whose value depends on the pool, against a position you can inspect, adjust or close directly at the protocol'],
  ['Who else is in it', 'A vault is shared. Another depositor’s behaviour and the pool’s composition affect you. An account you own has one participant'],
  ['Fee shape', 'Performance fees scale with profit and are charged on the pool. A per-action fee is charged on the action you asked for'],
  ['Reporting', 'A share in a pooled strategy classifies differently from positions held in your own name, which matters to some desks and not at all to others'],
]} />

## Which one you want

This is genuinely a preference, and the honest answer depends on something only you know.

<Steps>
  <Step title="Take the vault if you want the outcome, not the position">
    You want yield, you do not want to think about which pool or when to rebalance, and you
    are content to hold a claim. Most people are, and there is nothing naive about it.
  </Step>
  <Step title="Take the vault if the strategy is better than yours">
    A team running one strategy full time will usually beat you at that strategy. Paying 20%
    of profits for that is a normal trade.
  </Step>
  <Step title="Take your own account if the position must be yours">
    Because you need to inspect it, unwind it on your own schedule, report it as held
    directly, or because a redemption queue on a bad day is not acceptable to you.
  </Step>
  <Step title="Take your own account if the strategy is the point">
    If you have a view and want it executed exactly, a vault is the wrong container — you
    would be buying someone else's view instead.
  </Step>
</Steps>

## The test that tells them apart

Marketing will not, because both say non-custodial and both mean it. Ask this instead:

<Quote>
  If I stop, what do I hold — the position, or a claim on a pool that holds it?
</Quote>

And then the follow-up, which is the one that actually bites: **what has to happen before I
have my assets back?** A transfer you sign needs nothing from anyone. A redemption needs the
strategy to have liquidity, needs whatever it holds to be unwindable, and happens on terms
the strategy sets.

Neither answer is wrong. But they are different answers, and a page that calls both
"non-custodial" and leaves it there has not told you the thing you needed.

<Callout type="warn" title="Where we sit, and what that costs you">
  We are the second shape: assets stay in an account derived from your address, and the agent
  is appointed rather than given custody. That means no performance fee and no redemption
  queue — and also no professional running the strategy for you. You are choosing what to do;
  we execute it and tell you what it would have done first. If you wanted somebody else to
  decide, a vault is the better product and we would rather say so.
</Callout>