Veda founder warns vault users against misconceptions of safety

Sunand Raghupathi, the founder and CEO of Veda, wants DeFi users to stop treating vaults like they’re FDIC-insured checking accounts. His core message is blunt: onchain vaults are structurally closer to hedge funds than savings products, and the sooner users internalize that, the fewer people get hurt.

The warning comes at a time when vault infrastructure is quietly becoming the backbone of institutional DeFi. Veda’s own vaults power Kraken’s DeFi Earn product, which has pulled in over $600 million in deposits with more than $100 million in inflows since mid-2025. That kind of capital flow makes the “is this safe?” question considerably more expensive to get wrong.

The risk model has shifted

Raghupathi’s argument centers on a subtle but important evolution in where DeFi risk actually lives. For years, the nightmare scenario was a smart contract exploit: a bug in the code that lets an attacker drain a protocol overnight. That hasn’t disappeared, but it’s no longer the primary threat vector for well-audited vault systems.

Instead, the risks have migrated to the operational layer. Think key management, multisig governance setups, and the human decisions around how strategies get deployed and modified. The more relevant questions involve who controls the keys, how governance decisions get made, and what safeguards exist against a rogue operator or compromised signer.

Veda has processed more than $16 billion through its vault infrastructure without encountering a major smart contract incident.

Why the hedge fund comparison matters

Onchain vaults execute yield strategies across DeFi protocols, rebalance positions, and expose depositors to the full spectrum of smart contract, oracle, and liquidity risks that those underlying protocols carry. The vault itself might be well-built. The strategies it deploys into might not be.

Veda uses its BoringVault architecture and adheres to standards like ERC-4626, which provides a standardized interface for tokenized vault strategies. These technical choices help with transparency and composability, letting users and integrators understand what a vault is doing under the hood. But standardization isn’t insulation. A standardized vault running a risky strategy is still a risky vault.

Institutional money is paying attention

Veda raised $18 million in a round led by CoinFund in June 2025, and institutional interest in vault infrastructure has been accelerating alongside it.

The Kraken integration is the most visible proof point. Having a major centralized exchange route its DeFi yield product through Veda’s infrastructure signals that traditional crypto players are comfortable enough with the technology to stake their brand on it. But it also means retail users accessing DeFi Earn through Kraken’s interface might have even less visibility into what’s happening with their deposits than a native DeFi user would.

Veda has been expanding into new ecosystems including Solana, and integrating with platforms like Privy to broaden access. Each new integration brings in users who may be less familiar with the mechanics of onchain yield generation, making the education gap more consequential.

For institutional allocators, Veda’s pitch leans heavily on compliance controls and risk infrastructure. Institutional clients are evaluating operational security, key management practices, and governance structures alongside yield performance.

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