# Vault Book

Vault Book is a guide to DeFi lending and borrowing vaults.
It starts with Euler V2 and explains how modular vault-based markets are built, governed, priced, liquidated, secured, and integrated into apps.

Canonical URL: https://www.thevaultbook.org
Guide URL: https://www.thevaultbook.org/guide

Protocols:
- Euler (live): Modular credit vaults
- Morpho (planned): Optimized lending markets
- Aave (planned): Pooled liquidity markets

Chapter map:
- Introduction — Overview of how DeFi lending markets work, who this guide is for, and how Euler fits into the broader lending design space.
- Chapter 1: How Lending Markets Are Built — Compares isolated, pooled, and modular market designs, and explains how market structure shapes capital efficiency and risk containment.
- Chapter 2: How Risk Gets Managed — Explains the operational layer around vaults, including who sets policy, how governance works, and where human judgment still matters.
- Chapter 3: What a Curator Can Change — Covers the key vault parameters such as LTVs, caps, fees, hooks, and interest rate models, plus how each lever changes system behavior.
- Chapter 4: Where Prices Come From — Describes how lending protocols source prices, how adapters and fallback logic work, and why oracle design is central to solvency.
- Chapter 5: How Liquidations Work — Walks through unhealthy positions, liquidator incentives, and the mechanisms that protect lenders when borrower collateral falls short.
- Chapter 6: What Lenders Should Know — Focuses on utilization, withdrawal risk, collateral design, and the practical reasons lender yield is never free of trade-offs.
- Chapter 7: What Borrowers Should Know — Explains borrower-side hazards such as health-factor drift, liquidation exposure, rate spikes, and collateral mobility constraints.
- Chapter 8: How the Protocol Stays Safe — Summarizes audits, verification, pause controls, and hooks so readers can separate immutable guarantees from operational protections.
- Chapter 9: The Depositor Experience — Shows how batching, approvals, and account abstractions shape the real user experience of depositing, borrowing, and managing positions.
- Chapter 10: Building on Top — Covers the developer surface area around Euler, including SDKs, batching flows, integrations, and protocol-adjacent products like EulerSwap.

Notes:
- The interactive canvas lives at the homepage.
- The text guide at /guide is the best HTML source for indexing and retrieval.
- The current protocol coverage is Euler; Morpho and Aave are planned next.