Lorenzo Protocol organizes capital through a vault system, which serves as the backbone for deploying and managing on chain trading strategies. The protocol uses two primary types of vaults: simple vaults and composed vaults. Each serves a specific purpose in structuring investments and optimizing returns.
Simple Vaults
Simple vaults are designed to hold and manage a single strategy. These vaults are straightforward in structure and allow investors to gain exposure to one specific approach, such as:
Quantitative trading
Managed futures
Volatility focused strategies
Structured yield products
Simple vaults provide clear transparency and make it easy for investors to understand exactly where their capital is allocated. They are ideal for those seeking targeted exposure to a particular strategy without additional complexity.
Composed Vaults
Composed vaults combine multiple strategies into a single investment vehicle. These vaults allow investors to benefit from diversification across several trading approaches simultaneously. By routing capital into multiple simple vaults, composed vaults:
Enhance risk management through diversified exposure
Streamline investment by offering a single token representing multiple strategies
Enable more complex portfolio structures for advanced users
Why the Vault System Matters
The combination of simple and composed vaults allows Lorenzo Protocol to cater to both beginner and professional investors. Users can choose targeted strategies via simple vaults or diversify efficiently using composed vaults, all while leveraging smart contracts for automation, transparency, and security.
By structuring funds this way, Lorenzo Protocol bridges traditional portfolio management practices with the benefits of on chain automation, making sophisticated financial strategies accessible to a wide range of investors.
