Similar to other yield aggregation protocols, Badger vaults allow users deposit their assets to earn a yield generated on strategies that leverage opportunities presented across different DeFi protocols. After depositing, the smart contract puts those assets to work by executing the selected strategy for that vault.
Select vaults are incentivized using Badger emissions, which means that on top of the underlying APY users can get from the strategies itself they are able to earn Badger governance tokens.
Users must possess the want token of the vault in order to deposit assets. Depositing ones assets sends them to the vault address and returns the b-version of the underlying asset, also called b-tokens. Users deposited tokens are then deployed into earning opportunities using the underlying strategy laid out in vaults smart contract.
What are b-tokens? b-tokens are the representation of your deposit. To deposit and withdraw you trade between the want of the vault (token you deposit) and the b-token of the vault. The current PPFS ratio determines how many b-tokens you receive in return for your deposit. For recent vaults this PPFS ratio is usually 1:1 - which means that for every want token you deposit you get exactly one b-token out. This however is not the case for all vaults. Other vaults, specifically those that have direct vault auto-compounding increase their PPFS, may return a lesser amount of b-tokens so don't be alarmed if you receive a less than 1:1 ratio of vault tokens. The amount that you deposited minus the withdrawal fee is the least amount of tokens you will ever get out from the vault).