# How OmniYield Works

At its core, OmniYield uses smart contracts, real-time algorithms and cross-chain messaging layers to route liquidity to the highest-performing yield strategies across networks.

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### Here’s how it actually works for you:

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**Deposit**

You deposit your asset into an OmniYield vault from any supported chain.
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**Deployment**

Your deposited assets are automatically routed by our strategies into the highest-rate opportunities identified across our supported networks at the time.
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**Optimization**

Market conditions change fast, so do our strategies. 

On a regular basis, our system constantly analyzes real-time data, performance metrics and  rebalances the allocations to ensure your capital is always in the most efficient place, e.g. a lending protocol on Base today, a yield farm on Hyperliquid tomorrow.
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**Earn & Compound**

Rewards earned from underlying protocols are collected, converted back into your originally deposited asset, and automatically reinvested into the vault. This creates a compounding flywheel that grows over time. 

Users also accumulate any additional airdrops or points offered by the underlying protocols, which OmniYield collects and distributes.
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### Hub-and-Spoke Model & Unified Operations

To coordinate operations across dozens of blockchains (aiming for 50+), OmniYield operates on a hub-and-spoke model with Arbitrum serving as the central coordination hub and all other blockchains acting as execution spokes.

All cross-chain messaging and interactions are routed through and aggregated on the Arbitrum main chain. Arbitrum handles the necessary computations and then distributes the results and instructions back to the respective spoke chains.

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**Benefits:** The hub-and-spoke design ensures data consistency across all networks, as the Hub acts as the single source of truth. It also centralizes computationally intensive tasks on Arbitrum, promoting efficiency and simplicity.
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#### **Cross-Chain Messaging Foundation**

All cross-chain communication and data transfer capabilities are built upon the robust and secure infrastructure provided by LayerZero and Axelar. These protocols enable reliable message passing between the Arbitrum hub and the various spoke chains.

#### Consolidated Fee Reporting

The interconnected approach extends to how we handle protocol fees. 

Fees are generated across multiple chains where our strategies operate. However, we believe a chain-agnostic ecosystem should function as a unified entity with shared token mechanisms and fees, not as isolated deployments. Therefore, OmniYield employs a consolidated fee reporting method. Instead of calculating fees separately and potentially differently on each chain, we aggregate performance data on the hub and calculate fees consistently across the entire platform. This allows users the freedom to deposit and withdraw from whichever chain is most convenient for them, knowing the fee structure is unified and fair.

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### Vaults & Strategies

OmniYield simplifies and maximizes your DeFi earnings through a combination of vaults and strategies operating across multiple blockchains. You deposit a single asset, and behind the scenes, your funds are split, allocated, and rebalanced across top-performing protocols on various networks.

#### **Vaults**

Vaults are the primary user interface and fund management layer. They act as intermediaries between investment strategies and their underlying assets, receiving reports on metrics such as performance and liquidity from the strategies.

Assets deposited into vaults are algorithmically distributed into multiple sub-strategies - this enables users to access the best available yields across various farms in a single transaction.

#### **Strategies**

Linked to each vault are Strategy contracts. These are modular, dynamic engines that contain the specific logic for interacting with underlying DeFi protocols such as executing trades, depositing assets, and performing other actions needed to generate yield. Strategies are rebalanced through proposals made by an off-chain solver, and executed only if they meet constraints such as risk, fees, liquidity, slippage, and APR improvement. 

The essence of OmniYield Protocol is not only to “transfer” liquidity from one blockchain to another but also to design strategies for these transfers and constantly improve them. As vaults scale, strategies evolve without sacrificing performance. More sophisticated strategies with diverse risk and return profiles will be added in the future.

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Our modular architecture makes it simple to integrate new chains, assets, and strategies over time.\
Using advanced algorithms, we optimize protocols, networks, timing, and allocation to ensure maximum gains. These algorithms adapt in real-time to market conditions, analyzing emerging trends, historical performance, risk parameters, and project fundamentals to adjust tactics or reduce risk exposure.
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### Performance Fees

A performance fee of 9% is charged only on the profits your deposits generate within our vaults. There are no fees for depositing or withdrawing your funds.

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After the launch of [veOY](https://docs.omniyield.finance/tokenomics/veoy-locked-oy), 50% of this fee will be [distributed back](https://docs.omniyield.finance/tokenomics/veoy-locked-oy#earn-50-of-protocol-revenue) to veOY holders who vote on [OY emission](https://docs.omniyield.finance/tokenomics/veoy-locked-oy#direct-oy-token-emissions-from-vested-ecosystem-incentives).
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