How Lending Vaults work

When you stake into a Lavarage vault, you supply the liquidity traders borrow to open leveraged positions. They pay interest on what they borrow, and that interest is your yield. There are two vaults: SOL and USDC.

How it works:

You deposit SOL or USDC into the vault.
Traders borrow from it to open spot margin positions across the full range of Solana assets — majors, tokenized stocks, and long-tail tokens.
They pay interest; the vault's value grows; your share grows with it.

Note: when you stake you receive a receipt token — lstSOL for the SOL vault, USDL for the USDC vault. It represents your stake. Your receipt-token balance stays fixed; its redemption value (the vault's net asset value, or NAV, per token) grows as the vault earns, and that's how your yield accrues.

Principal protection: under normal operating conditions stakers aren't exposed to liquidation losses. If a trader's position is liquidated at a shortfall, the vault's liquidation operator (acting as backstop) takes over the position and repays the vault its principal plus interest. Your yield is pure interest income — this holds as long as the operator's backstop stays solvent.

Recap: stake liquidity → traders borrow → you earn their interest via a rising receipt-token value.