Key Concepts Explained

Your Personal Vault

Think of your vault as a smart safe deposit box:

What It Is

• A smart contract deployed on Scroll blockchain
• Your personal "home base" for all DeFi activities
• Tracks all your positions across multiple chains
• Only you have the key (non-custodial)

What It Does

• Holds your idle assets: USDC waiting to be allocated
• Tracks your positions: Monitors investments on other chains
• Executes transactions: Handles deposits, withdrawals, and bridging
• Collects yield: Accumulates earnings from your strategies

What It's NOT

• Not a new wallet (your wallet is for signing in)
• Not custodial (SynthOS cannot access your funds)
• Not on every chain (only on Scroll, but tracks positions everywhere)

Example

You deposit 1,000 USDC to your vault on Scroll, then allocate:

• 400 USDC → Aave on Arbitrum (8.5% APY)
• 300 USDC → Morpho on Base (12.3% APY)
• 300 USDC → Stays in vault (0% yield but available for quick moves)

Your vault on Scroll tracks all three positions, even though the assets are working on different chains.

Vault vs Wallet

Receipt Tokens (Shares)

When you deposit to a yield strategy, you receive receipt tokens that represent your share of the pool.

What Are They?

• Represent your share of the yield pool
• Increase in value as yield accrues
• Automatically tracked in your vault
• Can be withdrawn anytime (subject to strategy liquidity)

When you deposit:

1. You send 1,000 USDC to Aave
2. You receive ~950 aUSDC receipt tokens
3. These tokens represent your share of Aave's USDC pool

As yield accrues:

1. The value of each aUSDC token increases
2. After 1 month: Your 950 aUSDC might be worth 1,008 USDC
3. You earned 8 USDC (0.8% monthly return)

When you withdraw:

1. You return your 950 aUSDC tokens
2. You receive 1,008 USDC back
3. The receipt tokens are burned (destroyed)

Why Receipt Tokens?

Proof of ownership:

• Receipt tokens prove you have funds in the protocol
• Like a claim ticket for your deposit

Automatic yield tracking:

• Token value increases as yield accrues
• No need for manual calculations

Transferable:

• You could theoretically sell receipt tokens (though we don't recommend it)
• Enables composability with other DeFi protocols

Common Receipt Token Types

Important Notes

Exchange rate changes:

• 1 receipt token ≠ 1 USDC
• Exchange rate improves as yield accrues
• Check current rate before calculating value

Your vault tracks these automatically:

• You don't need to manually monitor receipt tokens
• Dashboard shows your position in USDC value
• Receipt tokens are abstracted away in the UI

Cross-Chain Bridging

SynthOS uses LayerZero to move your assets between chains safely and efficiently.

Why Cross-Chain?

Best yields are spread across different networks:

• Aave might offer 8% on Arbitrum
• Morpho might offer 12% on Base
• Compound might offer 7% on Optimism

Without cross-chain:

• You'd need wallets on every chain
• Manual bridging for each deposit
• Complex tracking across networks

With SynthOS:

• One vault on Scroll tracks everything
• Automated bridging handled for you
• Unified dashboard for all positions

How Bridging Works

Step-by-step process:

1. You initiate: Click "Allocate" to Aave on Arbitrum
2. Vault sends: Your USDC leaves your vault on Scroll
3. LayerZero bridges: Message sent across chains (2-5 minutes)
4. Destination receives: USDC arrives on Arbitrum
5. Protocol deposits: Funds deposited to Aave
6. Receipt tokens issued: You receive aUSDC
7. Validator confirms: Your vault updated with new position

What you see:

• "Processing" badge during bridge operation
• Estimated completion time (2-5 minutes)
• Real-time status updates
• LayerZero Scan link for tracking

Bridge Safety

Security measures:

• LayerZero is audited and battle-tested
• Used by 100+ protocols with billions in volume
• Each bridge operation verified before vault update
• Failed bridges trigger automatic refund

What could go wrong:

• Network congestion (delays, not losses)
• Slippage during volatile markets
• Destination protocol paused (refund triggered)

Protection mechanisms:

• Slippage protection (minimum output set)
• Timeout handling (refund after 24 hours)
• Validator monitoring (confirms completion)

Bridge Costs

LayerZero fees:

• Typically $0.50-$2.00 per bridge operation
• Paid in source chain gas token
• Covers relayer costs and destination gas

Gas fees:

• Source chain: You pay (Scroll is cheap ~$0.05)
• Destination chain: SynthOS sponsors
• Total cost: ~$0.55-$2.05 per cross-chain operation

Same-Chain Operations

If strategy is on Scroll:

• No bridging needed
• Instant confirmation
• Lower fees (~$0.05 total)
• Position active immediately

Validator Role

Our validator is an automated service that monitors cross-chain operations and updates your vault.

What the Validator Does

Monitors bridges:

• Watches LayerZero for message delivery
• Confirms your deposits arrived at destination
• Detects failed or stuck operations

Updates your vault:

• Marks deposits as "Confirmed" when complete
• Updates your position balances
• Triggers refunds if operations fail

Runs continuously:

• Checks every 60 seconds
• Processes all pending operations
• Handles multiple users simultaneously

What the Validator CANNOT Do

Cannot access your funds:

• No private keys or withdrawal permissions
• Cannot move assets from your vault
• Cannot create positions without actual deposits

Cannot bypass security:

• Cannot override slippage protection
• Cannot modify your positions arbitrarily
• Cannot withdraw on your behalf

Cannot guarantee success:

• Dependent on external bridges and protocols
• Cannot force failed bridges to succeed
• Cannot prevent destination protocol issues

Why We Need a Validator

Problem without validator: You: "I deposited 1,000 USDC to Aave" Vault: "I don't see it yet..." You: "But I sent it 5 minutes ago!" Vault: "How do I know it actually arrived?"

Solution with validator:

You: "I deposited 1,000 USDC to Aave"
Vault: "Marked as 'Processing', waiting for confirmation"
[2-5 minutes later]
Validator: "Confirmed! 950 aUSDC received on Arbitrum"
Vault: "Position updated, you're earning yield now"

Validator Transparency

On-chain verification:

• Validator address is public in smart contracts
• All validator actions recorded on-chain
• You can verify confirmations independently

Trust model:

• Validator is a notary, not a custodian
• Worst case: Delays in confirmation (not loss of funds)
• Backup validators available if primary fails

Strategy Allocation vs Position

Understanding the difference between what you intend to do and what you actually own.

Strategy Allocation

Definition: Your decision to invest in a specific yield opportunity

Characteristics:

• Intent to invest
• Initiated by you clicking "Allocate"
• Shows as "Processing" during cross-chain operations
• Not yet earning yield

Example:

You click "Allocate 1,000 USDC to Aave on Arbitrum"
Status: Allocation Pending
Funds: In transit via LayerZero
Yield: Not yet earning

Position

Definition: Actual holdings you own in a strategy (the receipt tokens)

Characteristics:

• Confirmed investment
• Shows as "Active" in your vault
• Currently earning yield
• Can be withdrawn anytime

Example:

After confirmation:
Position: 950 aUSDC in Aave on Arbitrum
Status: Active
Current Value: 1,008 USDC
Yield Earned: 8 USDC

Why the Distinction Matters

During cross-chain operations:

• Allocation = "I want to invest here" (pending)
• Position = "I own shares here" (confirmed)
• Gap between them = bridge time (2-5 minutes)

For your dashboard:

• Allocations show in "Pending Operations"
• Positions show in "Active Investments"
• Total Value = Active Positions + Pending Allocations + Idle Assets

For yield calculation:

• Allocations earn 0% (not yet invested)
• Positions earn APY (actively invested)
• Start earning only after allocation becomes position

Slippage Protection

When bridging across chains or swapping assets, prices can shift. Slippage protection ensures you don't get a bad deal.

What is Slippage?

Definition: The difference between expected and actual output

Causes:

• Price volatility during transaction
• Low liquidity in pools
• Network congestion
• Bridge fee fluctuations

Example:

Expected: Deposit 1,000 USDC, receive 950 aUSDC
Actual: Receive only 935 aUSDC (1.5% slippage)
Reason: aUSDC price increased during bridge operation

How Slippage Protection Works

You set a tolerance:

• 0.5% = Very strict (may fail in volatile markets)
• 1% = Normal (recommended for most operations)
• 2-3% = Lenient (for high volatility or low liquidity)

Smart contract enforces:

If actual output < (expected output × (1 - slippage tolerance)):
    Revert transaction
    Refund your deposit
Else:
    Complete transaction

Example with 1% slippage:

Expected output: 950 aUSDC
Minimum output: 950 × 0.99 = 940.5 aUSDC

Scenario A: Receive 945 aUSDC
Result: Yes - Transaction succeeds (above minimum)

Scenario B: Receive 935 aUSDC
Result: No Transaction reverts, USDC refunded

Setting Slippage Tolerance

For stable strategies (USDC → aUSDC):

• Recommended: 0.5-1%
• Reason: Minimal price volatility
• Risk: Low chance of revert

For volatile strategies (ETH → stETH):

• Recommended: 2-3%
• Reason: Price can move during transaction
• Risk: Higher chance of revert if too strict

For cross-chain operations:

• Recommended: 1-2%
• Reason: Bridge fees can vary
• Risk: Network congestion affects fees

When Slippage Protection Triggers

Transaction reverts if:

• Market moved against you significantly
• Bridge fees higher than expected
• Destination protocol deposit limit reached
• Low liquidity in destination pool

You get refunded:

• Full deposit amount returned to your vault
• Only lose gas fees (~$0.05-$0.10)
• Can try again with higher slippage tolerance

Slippage vs Fees

Slippage is NOT a fee:

• It's protection against unfavorable exchange rates
• You don't "pay" slippage to anyone
• It's a threshold for acceptable output

Fees are separate:

• Bridge fees: Paid to LayerZero
• Gas fees: Paid to network validators
• Protocol fees: Paid to SynthOS (on withdrawal)

Pending State

Understanding what "Processing" means and how long it takes.

What Causes Pending State?

Cross-chain deposits:

• Your funds are bridging to another chain
• Typical duration: 2-5 minutes
• Waiting for LayerZero message delivery

Cross-chain withdrawals:

• Your funds are bridging back to Scroll
• Typical duration: 2-5 minutes
• Waiting for receipt tokens to return

Validator confirmation:

• Bridge completed, waiting for validator to confirm
• Typical duration: 0-60 seconds
• Validator checks every 60 seconds

Pending State Timeline

For deposits:

0:00 - You click "Allocate"
0:10 - Transaction confirmed on Scroll
0:15 - LayerZero message sent
2:00 - Message delivered to destination chain
2:05 - Funds deposited to protocol
2:10 - Receipt tokens issued
3:00 - Validator confirms (next cycle)
3:00 - Position shows as "Active"

Total time: 3-5 minutes

What You See

In "Pending Operations" section:

• Destination strategy and chain
• Amount being deposited/withdrawn
• Estimated completion time
• Current status (Bridging → Confirming → Completed)
• LayerZero Scan link for tracking
• Message GUID (for support reference)

Status indicators:

• Processing: Bridge in progress
• Confirming: Bridge complete, waiting for validator
• Completed: Position active, earning yield
• Failed: Operation failed, refund triggered

When to Worry

Normal:

• Pending for 2-5 minutes (cross-chain)
• Pending for 0-60 seconds (validator confirmation)

Slight delay:

• Pending for 5-10 minutes (network congestion)
• Check LayerZero Scan for message status

Potential issue:

• Pending for 15+ minutes (rare)
• Check message status, contact support if "FAILED"

Guaranteed refund:

• If stuck for 24+ hours, automatic refund triggers
• Your funds are never lost

Idle Assets vs Invested Assets

Understanding where your funds are and what they're doing.

Idle Assets

Location: In your vault on Scroll

Characteristics:

• Earning 0% yield
• Available for instant allocation
• Can be withdrawn to wallet immediately
• No cross-chain operations needed

Use cases:

• Staging area for new deposits
• Waiting to find good opportunities
• Quick rebalancing buffer
• Emergency liquidity

Example:

Vault Balance:
- 500 USDC (idle)
- 0.05 ETH (for gas)

Status: Ready to allocate
Yield: 0%
Availability: Instant

Invested Assets (Positions)

Location: In yield protocols on various chains

Characteristics:

• Earning APY
• Represented by receipt tokens
• Requires withdrawal to access
• Cross-chain operations may be needed

Use cases:

• Active yield generation
• Long-term holdings
• Diversified portfolio
• Compounding returns

Example:

Active Positions:
- 1,000 USDC in Aave (Arbitrum) - 8.5% APY
- 750 USDC in Morpho (Base) - 12.3% APY
- 500 USDC in Compound (Optimism) - 7.2% APY

Total Invested: 2,250 USDC
Average APY: 9.6%
Current Value: 2,268 USDC (18 USDC earned)

Optimal Balance

Conservative approach:

• 90% invested, 10% idle
• Prioritizes yield generation
• Less flexibility for rebalancing

Balanced approach:

• 80% invested, 20% idle
• Good balance of yield and flexibility
• Can quickly capitalize on opportunities

Active trader approach:

• 70% invested, 30% idle
• Maximum flexibility
• Ready for rapid rebalancing

Gas Fees vs Protocol Fees

Understanding the different types of costs in DeFi.

Gas Fees

What they are:

• Network transaction fees
• Paid to blockchain validators
• Required for all on-chain transactions
• Not paid to SynthOS

Typical costs on Scroll:

• Create vault: ~$0.05-0.10 (one-time)
• Deposit to vault: ~$0.02-0.05
• Allocate to strategy: ~$0.05-0.15
• Withdraw: ~$0.05-0.15

Who receives them:

• Blockchain network validators
• Miners/stakers securing the network
• Not SynthOS or any protocol

Protocol Fees (SynthOS)

What they are:

• Fees for using SynthOS platform
• Performance fees (on profits)
• Paid to SynthOS

When charged:

• Only on withdrawal
• Calculated automatically
• Deducted from your withdrawal amount

Who receives them:

• SynthOS protocol treasury
• Used for development, audits, gas sponsorship

Bridge Fees (LayerZero)

What they are:

• Fees for cross-chain messaging
• Covers relayer costs
• Destination chain gas
• Paid to LayerZero

Typical costs:

• $0.50-$2.00 per bridge operation
• Varies by destination chain
• Higher during network congestion

Strategy Fees (External Protocols)

What they are:

• Fees charged by Aave, Morpho, etc.
• Usually built into APY
• Not separately visible
• Paid to external protocols

Example:

Aave gross yield: 9%
Aave protocol fee: 1%
Aave net yield: 8% (what you see)

Total Cost Example

Depositing 1,000 USDC to Aave on Arbitrum:

Gas fee (Scroll): $0.10
Bridge fee (LayerZero): $1.50
Destination gas (sponsored): $0.00
Total upfront cost: $1.60

After 1 year earning 8% APY:
Gross yield: 80 USDC
Performance fee (10% of profit): 8 USDC
Net yield: 58 USDC

Total fees paid: 8 USDC = ~$8.00
Net profit: $80 - $8.00 = $72.00

Next Steps

Now that you understand the key concepts:

1. Security & Protection - How your funds are secured
2. Troubleshooting Guide - Common issues and solutions

Ready to start? Launch SynthOS App →