# Flow of Funds

This page describes the standard flow of funds where YieldFi issues multiple Vaults. Each Vault is a distinct product/strategy with segregated asset control and accounting using segregated MPC wallets and segregated exchange accounts per Vault.

### Structure at a glance

YieldFi creates multiple Vaults (e.g., *Vault A / Vault B / Vault C*). Users deposit into a specific Vault, and YieldFi issues the Vault tokens to the user under that Vault’s terms.

Core principle: assets, liabilities, cashflows, and reporting are Vault-specific, implemented via segregated MPC wallets and segregated exchange accounts per Vault.

### Parties and roles

* Users: Deposit into a specific Vault and hold the Vault tokens.
* Issuer — YieldFi: Creates Vaults, defines Vault terms (with Curator input), issues Vault tokens, and oversees service providers and controls.
* Vault: Product-level pool with its own asset segregation, accounting, and terms.
* Curator: Executes strategy for the Vault and manage risks w\.r.t. deployments, rebalances, and liquidations.
* Segregated MPC Wallets (per Vault): On-chain wallets dedicated to each Vault (deposit, collateral/strategy, redemption/processing), used to receive, hold, and move assets.
* Segregated Exchange Accounts (per Vault): Vault-specific exchange sub-accounts used for execution, hedging, and yield strategies (where relevant).
* Administrator / Accounting / Paying Agent function (internal or outsourced): Maintains vault level assets and token supply, calculates NAV, processes mint/burn and redemptions, and produces reporting.

### Diagram — end-to-end flow of funds

```
Users
  |
  | (deposit request; eligibility/KYC gates as applicable)
  v
Issuer: YieldFi
  |
  | creates Vaults + publishes Vault terms + appoints Curator
  v
+-------------------+    +-------------------+    +-------------------+
| Vault A           |    | Vault B           |    | Vault C           |
| (Product/Strategy)|    | (Product/Strategy)|    | (Product/Strategy)|
+-------------------+    +-------------------+    +-------------------+
  |        |                 |        |                |        |
  |        |                 |        |                |        |
  |   Segregated             |   Segregated            |   Segregated
  |   MPC Wallets (A)        |   MPC Wallets (B)       |   MPC Wallets (C)
  |   + Exchange Accts (A)   |   + Exchange Accts (B)  |   + Exchange Accts (C)
  |        |                 |        |                |        |
  v        v                 v        v                v        v
Deploy into DeFi / Exchanges / Hedging / Yield Strategies (per Vault mandate)
  |
  v
Strategy P&L returns to the same Vault’s MPC wallets / exchange accounts
  |
  v
Fees -> Distributions (if any) -> Redemptions (per Vault rules)
```

### Step-by-step asset flows

#### Deposit and issuance (User → Vault)

1. User selects a Vault (e.g., *Vault A*) and initiates a deposit.
2. User transfers assets to Vault A’s dedicated deposit MPC address.
3. Operations/admin logic validates receipt and eligibility checks (as applicable).
4. YieldFi issues the Vault token/position to the user under Vault A and updates Vault-level accounting.

#### Deployment / execution (Vault → DeFi / Exchanges)

1. Assets stay in Vault A's deposit MPC address.
2. If the strategy uses exchanges, assets may be transferred to Vault A’s segregated exchange accounts (or mirrored/hedged there).
3. Otherwise, Curator executes strategy actions for Vault A:
   * DeFi deployments (whitelisted protocols/endpoints as applicable),
   * exchange execution / hedging,
   * rebalances and risk actions.

#### Income and P\&L collection (DeFi / Exchanges → Vault)

Strategy income, realized P\&L, and principal flows return to:

* Vault A collateral/strategy MPC wallets, and/or
* Vault A exchange accounts, with periodic sweeps back to MPC wallets where applicable.

#### Fees and expenses (paid from the Vault)

Vault-level management and/or performance fees (as applicable) are accrued and settled from Vault A assets only.

#### Distributions (if the Vault pays out)

If Vault A supports periodic payout, YieldFi processes distributions from Vault A’s redemption / processing MPC wallet to user wallets, per Vault terms.

#### Redemption (Vault → User)

1. User submits a redemption request for Vault A (per redemption rules, cooldown period, and limits).
2. YieldFi calculates redemption amount based on Vault A’s NAV/price and applies fees (if applicable).
3. Vault A sources liquidity by:

* using on-hand liquidity buffers, and/or
* unwinding DeFi positions, and/or
* closing exchange hedges and transferring assets back to MPC wallets.

4. YieldFi pays the user from Vault A’s dedicated redemption/processing MPC wallet and burns/reduces the user’s Vault token/position.

{% hint style="info" %}
In summary, Segregation is enforced at the Vault level through a dedicated MPC wallet set per Vault (deposit, collateral/strategy, and redemption/processing), plus segregated exchange sub-accounts with clear Vault attribution. YieldFi maintains Vault-specific books and records—positions, P\&L, NAV, and token supply/user balances—and prohibits cross-Vault transfers.
{% endhint %}


---

# Agent Instructions: 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://docs.yield.fi/due-diligence-questionaire/flow-of-funds.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.