> For the complete documentation index, see [llms.txt](https://mevcapital.gitbook.io/vaults-protocol/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://mevcapital.gitbook.io/vaults-protocol/architecture.md).

# Architecture

The architecture of MEV Capital’s Money Market Vaults is designed to connect liquidity providers with DeFi lending markets via a curated vault layer. This structure ensures efficient capital routing, robust risk management, and transparent yield generation across selected platforms such as Morpho and Euler.

The flow begins with **Suppliers**, who deposit assets (e.g., USDC, wETH, LSTs) into curated smart contract vaults. These funds are deployed into approved markets where borrowers provide collateral in exchange for liquidity, paying borrow APY. Suppliers benefit from both base lending yields and additional incentive mechanisms such as protocol rewards and point campaigns.

A dedicated [**Curation and Risk Management layer**](/vaults-protocol/methodology-and-curation.md) governs market selection, collateral thresholds, incentive capture, and withdrawal buffers. This framework ensures capital is deployed into high-confidence lending venues, optimizing for net APY while safeguarding solvency.

**Markets** are selected based on a composite scoring model factoring in:

* Borrower demand and utilization
* Yield efficiency post-incentives and slippage
* Asset quality, including liquidity depth and volatility metrics
* Protocol security, governance responsiveness, and oracle stability

MEV Capital vaults operate entirely on a non-custodial basis—suppliers retain full control of their assets, with transparent access to real-time performance metrics and underlying market exposures. All allocations and rebalancing decisions are enforced through auditable smart contract logic.

**Suppliers** act as liquidity providers by depositing assets such as USDC, wETH, and LSTs. These deposits generate yield through borrower interest payments and additional incentives distributed by integrated protocols. Depositors retain ownership of their assets and benefit from full non-custodial access and permissionless withdrawals.

**Borrowers** include DAOs, delta-neutral traders, and structured DeFi strategies who collateralize assets in order to access liquidity. Their positions are assessed continuously through real-time risk models incorporating collateral health metrics, oracle deviation detection, and liquidation risk simulations.

**Vault APY Composition** is an integral part of the vault structure. The net yield distributed to depositors is derived from multiple components, including:

* Base borrowing interest generated on deployed capital
* Protocol-specific token incentives and emissions
* Points or campaign-based ecosystem rewards
* Dynamic optimizations from the allocation engine, adjusting for utilization, risk, and slippage

These yield components are continuously tracked, benchmarked, and adjusted through real-time strategy updates to ensure performance remains competitive while maintaining robust liquidity and minimizing exposure to yield volatility.

***


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