Self Custody Collateral Vault
The Klara Vault is the foundation of the entire platform. Everything else, from your credit line to your spending card to your analytics, depends on the vault being secure, transparent, and fully controlled by the user. The vault is where your assets live, where your credit gets its value, and where the idea of using crypto without selling actually becomes possible.
Unlike custodial systems that hold your funds on your behalf, the Klara Vault is designed so that you, and only you, control your assets. You keep your keys. You approve every action. And the system simply reads what you choose to lock as collateral.
Below is the breakdown of how the vault works, why it matters, and how it powers the entire ecosystem.
4.1 What Is the Klara Vault
The Klara Vault is a smart contract based storage system that lets you lock crypto assets in a secure, self custodial environment. You can think of it like a personal safe that only you have the keys to, but with the added advantage that the safe can communicate its contents to other parts of the Klara ecosystem.
When you deposit assets into the vault, the vault:
• verifies your ownership
• stores the assets securely
• updates your collateral balance
• reports your collateral value to the credit engine
• protects assets from third party access
• ensures transparency through onchain records
Nothing inside the vault can move without your signature.
The vault operates independently from Klara. This means Klara cannot access, transfer, or modify your assets. The vault is yours, permanently.
4.2 How Collateral Locking Works
When you choose to deposit an asset into your vault, you approve a smart contract interaction. That contract handles the locking. Once locked, the asset becomes collateral that powers your credit line.
The process is simple:
You choose an asset and amount inside the app.
You confirm the deposit with your wallet or passkey.
The vault receives the asset and logs it onchain.
Price feeds update the real time value.
The credit engine mirrors that value as usable credit.
The vault never converts your crypto. It never sells it. It simply holds it as secured value that backs your credit.
Every locked asset remains visible onchain.
Anyone can verify the vault state.
This is what makes the system trustless.
4.3 Supported Assets and Collateral Rules
Not all assets are suitable for collateral. The vault supports assets that meet strict criteria for liquidity, stability, valuation accuracy, and oracle reliability.
Examples include:
• stablecoins like USDC, USDT, DAI
• major assets like ETH, SOL, BTC (coming)
• bluechips like ARB, OP
• liquid staking tokens (future)
Collateral rules are simple:
• your assets are always overcollateralized
• the vault monitors health ratios
• you can add collateral at any time
• you can remove collateral if health remains safe
• you cannot withdraw if it violates the minimum health requirement
These rules ensure your credit line stays safe even during market volatility.
4.4 Collateral Health and Liquidation Protection
Collateral health is the measure of how safe your credit line is relative to the market. It considers:
• asset value
• market volatility
• outstanding credit
• minimum health threshold
If your collateral value drops too much, your health ratio gets closer to risky levels. Klara notifies you instantly with in app alerts.
To protect users, Klara introduces a smarter liquidation model. Instead of instantly liquidating your entire position, the system uses controlled, partial corrections only when absolutely required.
This reduces liquidation shock and avoids unnecessary asset loss.
You can also set auto top up rules in the future.
For now, manual top ups allow you to maintain a safe level.
4.5 Self Custody and Passkey Security
Self custody means the vault belongs entirely to you. No one can access it without your approval. The vault is secured using passkeys, wallet signatures, and multi factor options in the future.
Klara cannot:
• freeze your vault
• drain your assets
• access your funds
• move collateral without permission
This ensures that even if the Klara service is offline, your vault remains yours and cannot be touched.
4.6 Transparency and Onchain Proof
The vault state is stored onchain. This gives the user:
• full visibility into deposits
• proof of collateral
• verifiable credit backing
• transparent valuation
• audit friendly data
There is no central database holding your assets.
Everything is public, trackable, auditable, and easy to verify with block explorers.
The vault system is designed to remove trust and replace it with transparency.
4.7 Why the Vault Makes Klara Possible
Without the vault, Klara would be just another custodial crypto card that sells your assets to fund payments. By keeping everything locked in a self custodial contract, Klara is able to give users a real credit line backed by assets they never lose control of.
The vault is the backbone that enables:
• spending without selling
• multi chain collateral
• onchain health tracking
• transparent credit issuance
• safe liquidation prevention
• global access to credit
• non custodial financial control
It is the single most important part of the entire ecosystem.