How Do Scream Vaults Work?
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Scream is a decentralized marketplace for lenders and borrowers. By depositing your initial asset in the vault, Grim deposits it into Scream and borrows against your token. This is done at safe levels of collateral.
The borrowed tokens are then redeposited into the platform, and once again used as collateral to borrow more tokens. This cycle is repeated multiple times to generate as much interest as possible to buy more of your originally deposited assets. It is noteworthy that this "leveraged" multi lending and multi borrowing is only with the native token, so there is no liquidation risk due to token price swings. Also, because of the multi supply/borrow cycle, a transaction fee for these vaults is generally 4x as high as compared to other vaults.
Because of accruing debt/supply interest, one may notice that the deposited token amount may decline ever so slightly in between harvests. After the harvest, you will see your deposited token amount go up as the yields are compounded back into it. The change in deposited token amount over time of typical Scream style vault looks as follows:
