Market Allocation Strategy
Market allocation is the most impactful action influencing vault composition, with a central role in defining a vault’s risk profile and overall APY.
To inform our allocation strategy, we use fine-tuned Agent-Based Simulations (ABS) that model market scenarios and user interactions within DeFi protocols. Our methodology incorporates detailed models based on sophisticated agent models and simulations that interact with smart contracts.
When allocating to a market, there are three main actions we can take that impact a vault’s risk profile and APY:
Adding a new market: When a new market is added and supply is allocated, the vault APY will change based on the allocation percentage and the supply APY rate.
Adjusting market allocations: To ensure Gauntlet-curated Vaults remain optimized for risk-adjusted yield, our models constantly review market allocations and make necessary adjustments.
Adjusting market caps: The caps we set serve to limit vault exposure to any one market. A cap represents the total amount of supply that can be allocated to a particular market.