> For the complete documentation index, see [llms.txt](https://docs.yield.fi/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.yield.fi/due-diligence-questionaire/operational-control.md).

# Operational Control

This page describes the operational control model where YieldFi operates multiple Vaults. The model replaces traditional administrator and agency functions with a software-driven control layer, uses MPC wallets and exchange sub-accounts for custody and execution, and makes the Curator the sole risk manager for each Vault.

### Operating model

YieldFi creates multiple Vaults (e.g., Vault A / Vault B / Vault C). Each Vault is a distinct product with its own terms, asset segregation, accounting, and reporting. Operational control is enforced through (i) Vault-level mandates, (ii) software modules that implement lifecycle rules, and (iii) segregated MPC wallets and exchange sub-accounts per Vault.

### Control objectives

• Maintain clear accountability for decision-making and execution\
• Enforce Vault-level segregation across assets, liabilities, cashflows, and reporting\
• Control asset movements with explicit permissions, logs, and verifiable execution trails\
• Produce consistent NAV, reporting, and user lifecycle processing at the Vault level

### Governance and decision rights

**YieldFi**\
• Approves creation, modification, and termination of Vaults\
• Publishes Vault terms, including deposit assets, fees, redemption SLAs, valuation policy, and risk limits in consultation with the Curator\
• Approves Curator appointment and maintains a Vault-specific mandate for the Curator\
• Oversees whitelisting of DeFi protocols and execution endpoints based on Curator requirements

**Curator**\
• Operates strategy execution within the Vault mandate\
• Initiates deployments, rebalances, hedges, liquidations, and position unwinds\
• Manages Vault-level risk within defined limits and escalation triggers\
• Provides strategy rationale and post-trade reporting inputs into the software control layer

### Roles and responsibilities (software + custody/execution control)

**Software Module — Vault Lifecycle & User Operations**\
• Processes deposits and redemptions per Vault terms (windows, limits, queues)\
• Mints/burns Vault tokens and maintains user balance ledger\
• Enforces eligibility/KYC gating where applicable\
• Produces user confirmations and lifecycle event logs

**Software Module — Accounting, NAV & Reporting**\
• Maintains Vault-level books (positions, cash, liabilities, P\&L, fees)\
• Calculates NAV per Vault methodology and frequency\
• Reconciles token supply vs Vault net assets and flags breaks\
• Produces reporting packs (NAV history, performance, holdings, fees)

**Software Module — Payment Waterfall & Fee Engine**\
• Accrues and settles Vault-level fees per terms\
• Enforces the Vault’s payment priority (fees → payouts/redemptions)\
• Generates an audit-ready trail of all calculations and settlements

**Segregated MPC Wallets (per Vault)**

* Segregated on-chain wallets per Vault, typically including:\
  • deposit wallet(s)\
  • collateral/strategy wallet(s)\
  • redemption/processing wallet(s)
* Execute transfers based on authorized instructions and policy checks\
  • Preserve immutable transaction history for all on-chain movements

**Exchange sub-accounts (per Vault)**\
• Segregated exchange sub-accounts per Vault used for execution, hedging, and yield strategies\
• Enforce Vault attribution at the venue level (positions, margin, financing, P\&L)\
• Produce account statements for reconciliation back into Vault accounting

### Vault segregation in operations

• Each Vault uses a dedicated MPC wallet set and dedicated exchange sub-accounts\
• The software modules maintain Vault-specific ledgers and reporting outputs\
• Asset movements only occur within the Vault’s approved pathways (MPC ↔ DeFi, MPC ↔ exchange sub-account)\
• Cross-Vault transfers are prohibited

### Asset movement controls

**Instruction controls**\
• Curator initiates strategy actions and transfers within the Vault mandate\
• Software enforces policy checks (whitelisted endpoints, limits, timing rules, role permissions) before execution\
• High-risk actions (new endpoint, large transfer, emergency unwind) trigger elevated checks and escalation

**Authorization controls**\
• Role-based access control across software modules and signing policies\
• Maker-checker approvals for sensitive actions (config changes, whitelist changes, large moves)\
• Full logging of who approved what, when, and why

**Reconciliations**\
• Reconcile MPC wallet balances and transactions against internal Vault ledger\
• Reconcile exchange sub-account balances, positions, and P\&L against internal Vault ledger\
• Exceptions are tracked with status, owner, and resolution notes

### NAV, pricing, and reporting controls

• Each Vault has a defined valuation policy (sources, frequency, cutoffs, fallback rules)\
• The NAV module produces daily/periodic NAV and flags pricing anomalies\
• Manual overrides (if any) are permissioned, justified, logged, and reviewable\
• Reporting outputs remain Vault-specific: NAV, performance, holdings, fees, and token supply reconciliation

### Fees and settlement controls

• Fees accrue and settle at the Vault level, not across Vaults\
• Distributions (if supported) and redemptions are paid from the Vault’s redemption/processing MPC wallet\
• Any off-chain settlements (e.g., exchange financing costs) are allocated back to the Vault ledger with supporting records

### Change management and escalation

• Vault term changes and risk-limit changes follow a controlled workflow (proposal → review → approval → versioned release)\
• Whitelist changes (protocols/endpoints) are versioned and auditable\
• Escalation triggers are defined per Vault (limit breach, liquidity stress, exchange margin events, oracle/pricing anomalies)\
• Incidents produce a post-event report and result in control updates where required