> 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/methodology-and-curation.md).

# Methodology & Curation

MEV Capital employs a structured methodology for vault curation that integrates protocol-level research, market-driven metrics, and quantitative safeguards. The objective is clear: allocate capital into environments that combine reliable yield opportunities with measurable and containable risk.

**Market and Asset Selection** begins with evaluating expected yield stability and the integrity of the underlying asset. This includes assessing:

* Interest rate curve behavior and consistency
* Emission schedules and token incentives
* Asset liquidity, volatility, and integration across DeFi protocols

Assets considered include major stablecoins with deep liquidity and strong peg history, liquid staking tokens backed by battle-tested validators, and ETH-based collateral with proven resilience. Markets exhibiting erratic utilization or unreliable incentives are excluded.

**Collateral Risk & Exposure Modeling** involves continuous calibration of LTV and LLTV parameters across integrated protocols. Each asset-market pair is modeled using simulations based on historical liquidation data, stress-tested slippage profiles, and oracle latency events. Exposure limits are enforced to prevent systemic correlation risks, ensuring that no single protocol, asset class, or borrower cohort can endanger the solvency of the vault structure.

**Protocol Due Diligence** includes a review of both technical and operational characteristics. Each protocol is evaluated for:

* Security posture (audit depth, bug bounty activity, historical exploits)
* Oracle architecture and responsiveness to adverse conditions
* Governance activity, upgrade cadence, and risk configuration flexibility

Protocols with opaque governance, rigid risk parameters, or recent instability are avoided. Ongoing monitoring is enforced after integration.

**Vault Infrastructure** operationalizes MEV Capital’s strategy in a live DeFi environment. Market intelligence is aggregated in real time, including supply/demand ratios, protocol incentive curves, and borrower concentration. A proprietary scoring engine continuously evaluates return-versus-risk dynamics across all eligible venues. Smart contract-driven allocation logic adjusts positions within protocol-specific limits, governed by policy parameters designed to prevent overextension and enforce conservative capital thresholds.

**Allocated Markets** represent the culmination of this curation and risk modeling process. Only markets that pass multiple layers of vetting—economic, technical, and governance—are eligible for capital deployment. The allocation engine is designed to favor composable yield opportunities, such as overcollateralized lending pairs and liquid synthetic assets, while actively pruning underperforming or structurally degraded markets.

This structured approach is designed to ensure vaults respond dynamically to changing market conditions, without compromising on exposure limits or liquidity assumptions. In a fragmented and competitive ecosystem, rigorous methodology is necessary to protect capital while remaining competitive on yield.

Allocated markets are continuously scored based on updated yield-to-risk ratios. Preferred markets include overcollateralized lending pairs, stable-yield vaults, and synthetic instruments with institutional-grade structure. The system dynamically reallocates capital when superior opportunities or risks emerge, ensuring alignment with vault mandates.

All operations are recorded transparently, and vault logic is enforced by permissionless smart contracts with auditable state transitions.


---

# Agent Instructions
This documentation is published with GitBook. GitBook is the documentation platform designed so that both humans and AI agents can read, navigate, and reason over technical content effectively. Learn more at gitbook.com.

## Querying This Documentation
If you need additional information that is not directly available in this page, you can query the documentation dynamically by asking a question.

Perform an HTTP GET request on the current page URL with the `ask` query parameter:

```
GET https://mevcapital.gitbook.io/vaults-protocol/methodology-and-curation.md?ask=<question>
```

The question should be specific, self-contained, and written in natural language.
The response will contain a direct answer to the question and relevant excerpts and sources from the documentation.

Use this mechanism when the answer is not explicitly present in the current page, you need clarification or additional context, or you want to retrieve related documentation sections.