Capital Allocation
Multyr applies capital allocation through a multi-layer architecture.
Capital is not routed through a single decision point. Instead, allocation can occur at different layers of the system, each operating within its own predefined rules, parameters, and constraints encoded in smart contracts.
At a high level:
- The Allocation Vault allocates capital across Strategy Vaults
- Each Strategy Vault allocates capital across its own eligible adapters or positions
- Each adapter connects capital to a specific external protocol
This design allows Multyr to separate system-level allocation from strategy-specific execution.
Allocation Layers
1. Allocation Vault Layer
The Allocation Vault is the top-level allocation layer.
Its role is to distribute capital across multiple Strategy Vaults according to predefined allocation logic. Each Strategy Vault represents a distinct opportunity set or strategy category, such as:
- USDC Lending
- Leveraged lending
- Delta-neutral strategies
- Structured yield strategies
At this layer, the system determines how much capital should be routed to each Strategy Vault relative to the others.
This is the primary layer for users who want automated allocation across multiple strategies rather than direct exposure to a single one.
2. Strategy Vault Layer
Each Strategy Vault is itself an allocation system.
A strategy does not necessarily map to a single protocol or position. Instead, it may distribute capital across multiple adapters or protocol integrations that fall within the scope of that strategy.
For example, the USDC Lending strategy allocates capital across multiple lending adapters connected to distinct protocols. In the current deployment, this includes integrations such as:
- Aave
- Euler
- Morpho
- Compound
- Venus
- Other eligible lending adapters
Within the strategy, capital can be redistributed between these adapters according to predefined parameters and constraints.
This means that allocation in Multyr can occur both:
- Across strategies, at the Allocation Vault layer
- Within a strategy, at the Strategy Vault layer
3. Adapter Layer
Adapters are the execution layer that connects a strategy to a specific external protocol.
Each adapter is isolated and scoped to a single integration. Its role is to:
- Deploy capital into a specific protocol
- Report position value back to the strategy or vault
- Allow capital to be recalled when allocation conditions change
Adapters do not define portfolio construction on their own. They serve as controlled execution targets within a broader strategy framework.
Core Allocation Principles
Capital allocation in Multyr is rule-based.
Allocation behavior is determined by predefined rules, parameters, and constraints encoded in smart contracts, with parameters subject to governance.
Multyr does not make discretionary investment decisions.
Instead, the system applies an explicit allocation framework that determines:
- Which targets are eligible
- How much capital may be allocated to each target
- Under what conditions allocation may change
- What constraints must be respected before capital is moved
Allocation Inputs
Allocation logic may consider multiple inputs, depending on the layer and strategy design. These may include:
- Target weights
- Available liquidity
- Protocol or adapter limits
- Yield conditions
- Strategy-specific risk parameters
- Buffer requirements
- Execution thresholds
Not every input is evaluated in the same way at every layer. For example:
- The Allocation Vault evaluates distribution across Strategy Vaults
- A Strategy Vault evaluates distribution across its own adapters or protocol exposures
Constraints
Allocation does not operate in an unconstrained way.
Depending on the vault or strategy, constraints may include:
| Constraint | Description |
|---|---|
| Maximum exposure per strategy | Caps total capital allocated to a single Strategy Vault |
| Maximum exposure per adapter or protocol | Caps total capital routed to a specific protocol integration |
| Liquidity constraints | Limits allocation to positions that satisfy liquidity requirements |
| Buffer requirements | Maintains a liquid reserve to support withdrawals and operational flexibility |
| Execution thresholds | Prevents unnecessary capital movement when the expected change is too small |
| Strategy-specific parameters | Additional rules defined within a given strategy |
These constraints are designed to structure how capital is distributed, not to eliminate risk.
Example: USDC Lending Strategy
The USDC Lending strategy illustrates how allocation works within a single strategy layer.
A user deposits into a vault that provides exposure to USDC lending opportunities. The strategy does not route all capital to one protocol. Instead, it allocates across multiple lending adapters connected to different protocols.
Within the strategy:
- Each adapter represents a distinct lending venue
- Capital can be shifted between adapters
- Allocation behavior follows predefined parameters
- No adapter has discretionary control over capital outside its defined role
As a result, the strategy functions as a controlled internal allocation system rather than a single static position.
Buffer and Allocation Efficiency
Multyr may maintain a liquid buffer that is not deployed to active strategies or adapters.
This buffer supports:
- Withdrawal readiness
- Operational flexibility
- More efficient capital movement when allocation changes are required
The presence of a buffer means that not all capital is necessarily deployed at all times.
This may limit deployment efficiency in some conditions, but can improve system responsiveness and withdrawal handling.
Risk Isolation
Allocation layers are separated from execution targets through isolated contracts and scoped responsibilities.
This design helps limit the impact of failures at a single point in the system. Examples include:
- A failure in one adapter does not automatically expose all other adapters
- A degraded strategy can be restricted without requiring the full system to stop
- Capital routing logic is separated from protocol-specific execution logic
Risk isolation improves containment, but does not eliminate losses.
Important Clarification
Capital allocation in Multyr should be understood as a hierarchical, rule-based process.
The system may allocate capital across Strategy Vaults, within individual Strategy Vaults, and toward protocol-specific adapters.
This does not mean that capital is managed discretionally. All allocation behavior follows predefined logic encoded in smart contracts.