# What Are On-Chain Vaults?

#### **How On-Chain Vaults Work**

1. **Secure Storage**:
   * When users wrap (zip) assets, the original tokens are deposited into Zipper’s multi-signature wallets.
   * These wallets are managed using a Trusted Execution Environment (TEE) protocol, ensuring that no single entity, including key custodians, can access or assemble the private keys.
2. **1:1 Backing**:
   * Every zAsset minted on Fabric corresponds to an equal amount of the original asset held in the vault. For example:
     * 10 zETH on Fabric = 10 ETH stored in Zipper’s vault.
3. **Transparent Operations**:
   * All vault transactions are recorded on-chain. Users can verify the status of their wrapped assets and the vault’s holdings at any time via FabricScan.

***

#### **Key Features**

1. **Multi-Signature Architecture**:
   * Requires multiple approvals for any asset withdrawal from the vault, preventing unauthorized access.
2. **TEE Protocol**:
   * Ensures the private keys for the multi-signature wallets are fragmented and never assembled by a single entity, even during transaction approval.
3. **Auditability**:
   * The vault’s on-chain nature allows users and third-party auditors to verify holdings and transactions in real-time.

***

#### **Security Measures**

1. **Risk Mitigation**:
   * By decentralizing key management and requiring multi-signature approvals, the vault system reduces risks like unauthorized withdrawals or insider attacks.
2. **Redundancy**:
   * Backup systems and contingency plans are in place to handle network issues or unexpected failures.


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