> For the complete documentation index, see [llms.txt](https://docs.notional.finance/leveraged-vaults/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.notional.finance/leveraged-vaults/leveraged-vaults.md).

# Leveraged vaults

## What are leveraged vaults?

Leveraged vaults are whitelisted smart contracts external to the Notional system that execute pre-determined strategies under specific risk constraints. Leveraged vaults may execute Notional-specific strategies or strategies that involve interacting with one or more external protocols like Curve, Balancer, or Uniswap.

The purpose of leveraged vaults is to allow users to get highly levered exposure to the returns of a particular strategy. Notional achieves this by recognizing the assets in a leveraged vault as collateral against the user's debt. 

Learn more about leveraged vaults [<mark style="color:blue;">here</mark>](https://docs.notional.finance/notional-v2/leveraged-vaults/overview).

## Leveraged vaults returns

Leveraged vault returns depend on the amount of initial capital the user contributes, the amount of debt they take on, the returns of the vault, and the fixed rate they pay on their debt.&#x20;

Users should also take into account transactions fees when entering a vault.

Learn more about leveraged vaults returns and vaults transaction costs [<mark style="color:blue;">here</mark>](https://docs.notional.finance/notional-v2/leveraged-vaults/vault-returns).

## Leveraged vaults risks

Vaults are also subject to economical risks such as price risks and liquidity risks.&#x20;

If the value of a vault share decreases such that the value of a user's assets falls and their leverage ratio breaches the max ratio, they can be liquidated. Learn more about leveraged vault liquidations [<mark style="color:blue;">here</mark>](https://docs.notional.finance/notional-v2/leveraged-vaults/liquidation).

Some vaults can also be settled early in the event that on-chain liquidity dries up. Early settlements are used to protect vault users against excessive slippage when redeeming vault shares.