An Auto-Compounding Vault is a financial tool used in decentralized finance (DeFi) to automatically reinvest earnings earned from staking, lending, or liquidity providing. Instead of manually claiming rewards, the vault accumulates them and automatically reinvests them into the original investment.This process enhances the power of compound interest, allowing users to earn yields on both their initial investment and the reinvested rewards. By leveraging this feature, users can maximize their potential returns over time.Typically, users deposit their assets into the vault, and the underlying protocol takes care of the rest. This includes optimizing yield strategies, adjusting to market conditions, and maintaining liquidity. As a result, investors can benefit from a more hands-off approach to growing their crypto portfolios.One of the key advantages of Auto-Compounding Vaults is that they reduce the time and effort needed for managing investments, allowing users to focus on other opportunities while still reaping the benefits of compounding returns.