Curated Vaults

Passive yield from actively managed strategies — fully on-chain, non-custodial, allocating across Vortum products and external DeFi protocols on any chain.

Core Insight

Curators allocate depositor capital across Vortum's internal products (lending, perps, LP) and external DeFi protocols on any supported chain (Aave, Kamino, Morpho, and more). Internal reallocation is atomic. Cross-chain allocation uses Transfusion's settlement layer — the canister signs transactions on Ethereum, Solana, and EVM L2s directly via threshold cryptography.

Why Curated Vaults?

Yield vaults are proven — Yearn pioneered automated yield strategies, Morpho refined them with curator-driven allocation. But every existing vault system shares the same structural weakness: cross-protocol risk.

A Yearn vault deploying across Aave, Compound, and Uniswap must manage approvals across governance systems, handle multi-contract interactions, and execute multi-transaction strategies that can partially fail. Each protocol is a separate trust domain with its own upgrade risk, oracle dependency, and failure mode.

Vortum vaults are different in two ways. First, internal products (lending, perps, spot LP) share one system — reallocation between them is atomic, not a cross-protocol transaction. Second, Transfusion's cross-chain settlement layer lets curators deploy capital to external protocols on Ethereum, Solana, and EVM L2s — the canister signs transactions directly via threshold cryptography. One vault, every yield source, any chain.

	Yearn v3	Morpho MetaMorpho	Vortum
Architecture	Multi-protocol strategies	Curator-allocated across lending markets	Curator-allocated across Vortum products + external DeFi on any chain
Composability	Cross-protocol calls	Single lending protocol	Atomic — lending, perps, spot, LP in one system
Reallocation	Multi-tx, may need governance	Curator tx, single protocol	Atomic — single call
Cross-protocol risk	High — approvals, upgrades, dependencies	Low — one protocol	None — all products share one system
MEV exposure	Rebalance txs visible in mempool	Rebalance txs visible in mempool	No mempool — no front-running of rebalances
Multi-chain	Per-chain deployment	Per-chain deployment	Native multi-chain via Chain Fusion — allocate to external protocols on any supported chain
Transparency	On-chain, but across many contracts	On-chain, single protocol	On-chain, unified state — full allocation visible
Auditability	Requires indexing multiple protocols	Single protocol state	Unified state — trivially queryable

The Composability Advantage

When lending, perps, and spot share one state, strategies that would require complex cross-protocol orchestration elsewhere become trivial. A delta-neutral strategy that lends USDC while hedging with a perp short is two internal operations — not two protocols, two approvals, and a prayer that both execute atomically.

How It Works

Depositors provide capital and receive vault shares representing their pro-rata ownership. They choose a vault based on its strategy, risk profile, and curator track record — then sit back.

Curators are the active managers. They decide how vault capital is deployed: which lending books to enter, whether to capture perp funding rates, how much to allocate to LP provision. They earn performance fees on the yield they generate.

Architecture

Vaults sit on top of the existing product layer and can reach external protocols via Transfusion:

Each vault is a subaccount within Vortum's existing account system — up to 255 subaccounts per principal. The vault's subaccount holds depositor funds and interacts with lending, perps, and spot exactly as any other account would. No special infrastructure — just a managed subaccount with curator permissions and share accounting.

Vaults
├── VAULT_CONSERVATIVE_001   → 100% lending
├── VAULT_BALANCED_002       → lending + LP + funding
├── VAULT_DELTANEUTRAL_003   → lending + hedged perps
└── VAULT_MM_004             → orderbook LP + perps

Each vault is identified by a unique ID, tracks its own share token supply, and maintains an independent NAV.

Net Asset Value (NAV)

A vault's NAV is the total value of all positions and idle capital it holds, minus any accrued fees:

NAV = Idle USDC
    + Lending Positions (principal + accrued interest)
    + LP Positions (mark-to-market)
    + Perp Positions (margin + unrealized PnL)
    − Accrued Management Fees

NAV is recalculated on every deposit, withdrawal, and rebalance. Share price derives directly from it: Share Price = NAV / Total Shares. Because all underlying positions live in the same canister, NAV calculation reads state directly — no cross-contract calls, no oracle dependencies for internal position values.

Auto-Lend vs. Curated Vaults

Vortum's auto-lend feature lets any trader earn yield on idle USDC automatically — zero configuration, single-asset, lending only. Curated Vaults are the managed extension: multi-strategy, multi-product, professionally curated. Auto-lend is "set and forget." Curated Vaults are "choose your manager."

Strategy Types

Strategy	Allocation	Target APR	Risk	Description
Conservative	100% lending (open + fixed-term)	4–7%	Low	Depositor capital lent across rate books; curator optimizes term selection
Balanced	60% lending · 30% LP · 10% funding	8–14%	Medium	Diversified across yield sources; LP fees + lending rates + funding payments
Delta-Neutral	50% lending · 50% hedged perps	10–18%	Medium	Lend USDC while capturing funding rates with hedged perp positions
Cross-Chain Yield	40% internal · 60% external DeFi	8–20%	Medium-High	Deploy across Aave, Kamino, Morpho + Vortum lending; curator optimizes across chains
Market-Making	80% orderbook LP · 20% lending	12–25%	Higher	Provide liquidity on spot and perp books with dynamic spread management

Strategy Constraints

Curators don't have unlimited freedom — each vault defines strategy constraints that limit what the curator can do:

Constraint	Example	Purpose
Allowed products	Lending only, lending + LP, or lending + external DeFi	Restrict which internal products and external protocols the vault can use
Max perp exposure	No directional positions, or delta-neutral only	Prevent the curator from taking speculative bets
Max single allocation	No more than 40% in any one market	Force diversification
Min lending share	At least 30% in lending at all times	Ensure baseline liquidity for withdrawals
Leverage cap	No leverage, or max 2x	Limit downside risk

Constraints are set at vault creation and enforced by the canister. The curator's reallocation calls are validated against constraints before execution — a curator cannot override them.

Curator System

Who Can Curate

Anyone can create a vault and become a curator — there's no permissioned whitelist. But depositors choose vaults based on on-chain track records, so curators earn trust through performance:

Curator Type	Example	Advantage
Quant teams	Algorithmic strategy firms	Systematic, data-driven allocation
DeFi funds	Crypto-native asset managers	Deep market knowledge, active monitoring
DAOs	Treasury management DAOs	Community governance over strategy
Individuals	Experienced traders	Lean, fast decision-making

Skin in the Game

Curators stake their own capital in the vault — aligned incentives, not just fee extraction:

Requirement	Details
Minimum stake	Curator deposits own capital (e.g., 5% of vault TVL up to a cap)
Lock period	Curator stake locked for minimum duration (e.g., 30 days)
First-loss	Curator's stake absorbs losses before depositors

On-Chain Track Record

Every curator action is logged and publicly queryable:

• Historical allocations and rebalance timestamps
• Realized APR by period (7D, 30D, 90D, all-time)
• Maximum drawdown
• Volatility (standard deviation of daily returns)
• Total value managed
• Depositor count and retention

No off-chain dashboards, no self-reported numbers — the canister state is the track record.

Risk Controls

Control	Mechanism
Per-vault allocation limits	Canister enforces strategy constraints on every reallocation
Max drawdown trigger	If vault NAV drops below threshold (e.g., -5%), auto-unwind to 100% lending
Withdrawal reserve	Minimum percentage always held in liquid positions (lending open-term or idle)
No directional perp exposure	Configurable per vault — conservative vaults block one-sided perp positions
Curator cooldown	Rate limit on rebalance frequency to prevent churn (e.g., max 1 rebalance per hour)
Emergency shutdown	Canister can freeze vault and return all capital to depositors

Max Drawdown Protection

Drawdown thresholds are configurable per vault. Conservative vaults may use tighter limits; aggressive vaults wider. Example thresholds for a balanced vault:

In Safe Mode, the vault automatically moves all capital to open-term lending — the lowest-risk position available. The curator cannot reallocate until NAV recovers and an admin reviews.

Deposits & Withdrawals

Deposits

Instant. Depositor sends USDC to the vault, receives vault shares representing their pro-rata ownership of the vault's total value:

Shares Received = Deposit Amount / Share Price
Share Price = Total Vault NAV / Total Shares Outstanding

Example:
  Vault NAV: 500,000 USDC · 100,000 shares outstanding
  Share price: $5.00
  Deposit: 10,000 USDC → 2,000 shares
  New NAV: 510,000 USDC · 102,000 shares · share price still $5.00

Deposits are denominated in USDC initially. Multi-asset vaults (accepting BTC, SOL) can be added later.

Withdrawals

Withdrawal speed depends on the vault's current allocation:

Position Type	Withdrawal Speed	Mechanism
Idle USDC	Instant	Direct transfer
Open-term lending	Instant	Recall from lending book
Fixed-term lending	Queued	Wait for maturity or early-exit with fee
LP positions	Near-instant	Remove liquidity from orderbook
Perp positions	Near-instant	Close position at market

For vaults with illiquid positions, a withdrawal queue processes requests in FIFO order as positions mature or are unwound. The withdrawal reserve (enforced by risk controls) ensures most withdrawals are instant.

Share Tokens

Vault shares are internal accounting units tracked by the canister. Each share represents a claim on the vault's net asset value. Shares are non-transferable initially — transferability and tokenization (ICRC-1 fungible token standard) can be added in a future phase.

Fee Model

Fee	Amount	Paid By	Recipient	Trigger
Management fee	0–2% annually	Vault NAV	Curator	Accrued continuously, deducted from NAV
Performance fee	10–20% of yield	Vault profits	Curator	Charged on positive returns above high-water mark
Protocol fee	5–10% of curator fees	Curator fees	Protocol treasury	Deducted from curator's management + performance fees

High-Water Mark

Performance fees are only charged on new profits. If a vault's NAV drops and later recovers, the curator earns nothing on the recovery — only on gains above the previous peak:

Example (20% performance fee):

Period 1: NAV $100 → $112   → Curator earns 20% of $12 = $2.40
Period 2: NAV $112 → $105   → Curator earns nothing
Period 3: NAV $105 → $118   → Curator earns 20% of $6 ($118 - $112) = $1.20

This prevents curators from earning fees on recovery after drawdowns — standard practice in traditional asset management.

Cross-Chain Strategies

The strategies described above allocate within Vortum's own products — atomic, zero cross-protocol risk. But Transfusion's cross-chain settlement layer opens a second tier: curators can deploy vault capital to external DeFi protocols on other chains.

The canister holds signing keys for Bitcoin (threshold Schnorr), Ethereum and EVM L2s (threshold ECDSA), and Solana (threshold Ed25519). It can read external protocol state via HTTPS outcalls and submit transactions directly — no bridges, no relayers.

How It Works

A curator managing a cross-chain vault can:

1. Deposit vault USDC into Aave on Ethereum by signing an ERC-20 approve + supply transaction via threshold ECDSA
2. Monitor the position's health and yield by querying Aave's contracts via HTTPS outcalls
3. Withdraw back to the canister by signing a withdrawal transaction
4. Reallocate between external protocols and internal Vortum products

Internal vs. External Trade-offs

	Tier 1 · Internal	Tier 2 · External
Execution	Atomic — single call	Async — inter-canister calls + chain finality
Cross-protocol risk	None	Present — external protocol bugs, upgrades, governance
Latency	Instant	Seconds to minutes (chain finality)
State after await	Guaranteed consistent	Must re-verify — state may change during async
Yield sources	Vortum lending, perps, LP	Entire DeFi ecosystem across all chains
Composability	Full — shared canister state	Partial — read via HTTPS outcalls

Async Safety

ICP's async model means state can change between sending a cross-chain transaction and receiving confirmation. Cross-chain vault strategies must follow ICP's safety patterns: never assume state after await, use guards that modify state, and implement rollback semantics. Tier 2 strategies carry inherently more risk than Tier 1.

Strategy Constraints for Cross-Chain

Cross-chain allocation introduces risks that don't exist internally. Strategy constraints for Tier 2 vaults are stricter:

Constraint	Purpose
Max external allocation	Cap on total capital deployed outside Vortum (e.g., max 30%)
Whitelisted protocols	Only pre-approved external protocols (Aave, Kamino, etc.)
Whitelisted chains	Only chains with production threshold signatures
Min internal reserve	Higher than Tier 1 — more capital kept internally for withdrawal liquidity
External position monitoring	Canister must be able to read position state via HTTPS outcalls; opaque protocols are excluded

This tiered approach lets Vortum offer the full DeFi yield landscape while being honest about the risk gradient: internal allocations are safe and atomic, external allocations are powerful but carry cross-protocol and async risk.

Transparency

Everything about a vault is visible on-chain, queryable via API:

Data	Visibility
Current allocation	Real-time — which products, how much in each
Historical returns	Per-period APR, cumulative return, drawdown chart
Curator actions	Every rebalance logged with timestamp and allocation change
Fee accrual	Management and performance fees visible in real-time
Depositor count	Total depositors and TVL
Strategy constraints	What the curator is and isn't allowed to do
Curator stake	How much of their own capital is in the vault

No quarterly reports, no trust-based dashboards. The canister state is the audit — anyone can verify allocation, performance, and fees at any time.

Challenges

Challenge	Approach
Curator risk	Curators can underperform or make poor allocation decisions; skin-in-the-game requirement, max drawdown triggers, and transparent track records let depositors evaluate and exit
Curator abandonment	A curator may stop actively managing; inactivity detection triggers Safe Mode after a configurable period (e.g., 30 days no rebalance), auto-unwinding to lending-only
Illiquid withdrawals	Fixed-term lending positions can't be instantly unwound; withdrawal reserve ensures most exits are instant, queue handles the rest
Strategy complexity	Depositors may not understand delta-neutral or funding capture strategies; clear risk labels (Conservative / Balanced / Aggressive) and plain-language descriptions
Bootstrapping	New curators have no track record; seed with protocol-managed vaults, low minimum deposits, and a testnet paper-trading phase
TVL concentration	If most capital flows to one vault, the curator has outsized influence; per-vault TVL caps and protocol-level diversification incentives mitigate concentration
Product dependency	Vaults are most useful when lending, perps, and LP are all live; initial vaults launch as lending-only (Conservative), expanding to multi-product as each ships
Cross-chain execution risk	External protocol interactions are async and can fail mid-execution; strict per-chain position limits, rollback handlers, and mandatory HTTPS outcall monitoring
Smart contract risk	A canister bug could affect all vaults; mitigated by stable memory persistence, integration tests, and graduated rollout
Regulatory uncertainty	Managed vaults may be classified as investment products in some jurisdictions; geographic restrictions and legal review