> For the complete documentation index, see [llms.txt](https://docs.secured.finance/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.secured.finance/yield-vault/core-mechanics/strategy-framework-and-allocation-model.md). # Strategy Framework and Allocation Model #### Purpose of This Page This page explains how strategies integrate with Vaults and how capital is allocated, managed, and withdrawn. *** #### What Is a Strategy? A **Strategy** is a contract responsible for generating yield using Vault assets. Each strategy: * Accepts assets from the Vault * Deploys them according to its own logic * Reports balances and performance back to the Vault Strategies are designed to be **independent and reusable**.\ A single strategy may be connected to multiple Vaults, depending on configuration. *** #### Strategy Responsibilities From the Vault’s perspective, a strategy must be able to: * Receive assets * Return assets on request (subject to liquidity constraints) * Accurately report its current balance * Reflect gains or losses over time How the strategy achieves this is intentionally left abstract at the Vault level. *** #### Allocation Model Vaults allocate capital to strategies based on configuration parameters. These may include: * Maximum allocation limits * Strategy capacity * Liquidity characteristics * Risk considerations A Vault may: * Use a single strategy * Distribute capital across multiple strategies * Adjust allocations over time The allocation logic can evolve without changing the Vault interface. *** #### Strategy Lifecycle Strategies typically follow a defined lifecycle: 1. Deployment 2. Registration with the system 3. Activation for allocation 4. Ongoing operation and reporting 5. Allocation reduction or pause 6. Removal, if necessary This lifecycle allows strategies to be managed safely without forcing users to exit the Vault. *** #### Handling Yield and Losses Strategies may generate: * Positive yield * No yield * Temporary or permanent losses All outcomes are reflected at the Vault level through changes in total assets. Vault Shares automatically adjust in value to reflect strategy performance, without requiring user action. *** #### Risk Boundaries It is important to clearly define what the Vault does and does not guarantee. * Vaults do not guarantee principal * Vaults do not guarantee yield * Strategy risk is borne collectively by Vault participants The modular design allows risk to be managed, but not eliminated. *** #### Why This Framework Matters This strategy framework enables: * Incremental addition of new strategies * Experimentation without disrupting users * Clear separation between infrastructure and execution * Long-term scalability of the Vault system --- # 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, and the optional `goal` query parameter: ``` GET https://docs.secured.finance/yield-vault/core-mechanics/strategy-framework-and-allocation-model.md?ask=&goal= ``` `ask` is the immediate question: it should be specific, self-contained, and written in natural language. `goal` is optional and describes the broader end goal you are ultimately trying to accomplish on behalf of the user. GitBook uses it to tailor the answer towards what is most useful for that goal. 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.