# What is A Liquidity Vault Vaults are a common feature in Web3 and DeFi, designed to simplify the user experience. But many existing vault providers underperform and offer limited exposure — often restricted to standard pairs like ETH-USD or pegged ETH variants. Krystal’s Liquidity Vault is different. It’s a smart contract that functions as a dynamic portfolio manager. It holds and actively manages **multiple LP assets**, runs automated strategies, collects fees, adjusts positions, exits, and optionally vault can support external deposits in exchange for vault shares. **Core Capabilities:** * Manages multiple LP assets * Auto collect and convert fees * Enables auto-compounding, rebalancing, exiting, and more * Auto-farm with enabled AI Agent ### **Why use a Vault?** * **Fewer Transactions, Less Gas:** Bundle multiple LP actions (e.g. migrate, rebalance) into fewer txs * **Safer and More Secure:** Vault permissions are scoped to the Vault only—unlike LP Strategies/Positions, which require permission across the entire NFT asset * **Simplified UX:** Great for both normies and experienced users * **Unlock More Opportunities:** Go beyond basic ETH pairs. Tap into niche markets, long-tail tokens, and custom strategies to maximize your edge in DeFi. * **Passive Earning:** Let others deposit into your Vault and take a cut from performance fees ### Types of Liquidity Vault There are 2 types of Liquidity Vault at Krystal: * **Auto-Farm Vault**: Liquidity Farming through a Vault interface with enhanced management tools and **AI Agent**. * **Shared Vault**: Allow public users to deposit into a vault; the vault owner takes a cut of the performance fee. --- # Agent Instructions: Querying This Documentation If you need additional information that is not directly available in this page, you can query the documentation dynamically by asking a question. Perform an HTTP GET request on the current page URL with the `ask` query parameter: ``` GET https://docs.krystal.app/products/vaults/what-is-liquidity-vault.md?ask= ``` The question should be specific, self-contained, and written in natural language. The response will contain a direct answer to the question and relevant excerpts and sources from the documentation. Use this mechanism when the answer is not explicitly present in the current page, you need clarification or additional context, or you want to retrieve related documentation sections.