From ffe81b2a434c59d54405338d3f575e58c305ba13 Mon Sep 17 00:00:00 2001 From: =?UTF-8?q?Emanuel=20Tesa=C5=99?= Date: Tue, 9 Jun 2026 11:41:39 +0200 Subject: [PATCH 1/3] Update public docs --- docs/curation/index.md | 18 +++++++-------- docs/curation/roles-and-operations.md | 32 ++++++++++++--------------- 2 files changed, 23 insertions(+), 27 deletions(-) diff --git a/docs/curation/index.md b/docs/curation/index.md index 7632914f..58e2914d 100644 --- a/docs/curation/index.md +++ b/docs/curation/index.md @@ -50,7 +50,7 @@ All vaults share the same [role structure](/curation/roles-and-operations) and [ | ------------------------------ | ----- | ---------------------------------- | -------------------------------------------- | | [Api3 Core](#api3-core) | USDC | Conservative, blue-chip collateral | wstETH, cbBTC | | [Kabu](#kabu) | USDC | Mid-cap governance tokens | COMP, MORPHO, EIGEN, SYRUP, FLUID, ONDO, BAL | -| [Api3 dCOMP](#api3-dcomp) | USDC | Single dCOMP collateral market | dCOMP | +| [Api3 dCOMP](#api3-dcomp) | USDC | Dedicated dCOMP collateral market | dCOMP | ### Api3 Core @@ -67,7 +67,7 @@ Given the higher volatility and lower liquidity of these assets compared to blue ### Api3 dCOMP -Api3 dCOMP is a single-market vault collateralized by [dCOMP](https://github.com/api3dao/dcomp) — a lightweight, ownable wrapper for the COMP governance token configured with a specific delegate. +Api3 dCOMP is a vault built around a dedicated lending market collateralized by [dCOMP](https://github.com/api3dao/dcomp) — a lightweight, ownable wrapper for the COMP governance token configured with a specific delegate. While preserving the inherent voting power of the underlying COMP, this wrapper allows the owner to reassign the delegated address. Users can wrap their COMP to receive dCOMP tokens, which can then be deposited as collateral. By wrapping COMP into dCOMP, users can effectively amplify the voting power of the designated delegate. @@ -75,12 +75,12 @@ The Api3 dCOMP vault supplies the USDC borrow-side liquidity for this market, ma ## Fees -All Api3 vaults use a V1 vault as an intermediary layer that handles the actual market allocations (see [vault architecture](/curation/roles-and-operations#vault-architecture)). -A **5% performance fee** on earned interest is charged at the V1 vault layer. This is the only fee — the V2 (user-facing) vault charges nothing additional. +Each Api3 vault charges a single **5% performance fee** on the interest earned from borrowers (see [vault architecture](/curation/roles-and-operations#vault-architecture)). +There is no management fee on assets under management. -| Layer | Fee type | Amount | -| -------- | --------------- | ------ | -| V2 Vault | Performance fee | 0% | -| V1 Vault | Performance fee | 5% | +| Fee type | Amount | +| --------------- | ------ | +| Performance fee | 5% | +| Management fee | 0% | -The fee is charged only on interest earned from borrowers, not on deposited principal. +The performance fee is charged only on interest earned from borrowers, not on deposited principal. diff --git a/docs/curation/roles-and-operations.md b/docs/curation/roles-and-operations.md index b94be3ee..92f886c2 100644 --- a/docs/curation/roles-and-operations.md +++ b/docs/curation/roles-and-operations.md @@ -12,41 +12,37 @@ All Api3 vaults share the same role structure and operational setup stewarded by ## Roles -| Role | Held by | -| --------- | ------------------------ | -| Owner | Api3 Foundation Multisig | -| Curator | Api3 Foundation Multisig | -| Allocator | Api3 Foundation Multisig | -| Guardian | Api3 monitoring team | +| Role | Held by | +| --------- | ------------------------------------------------ | +| Owner | Api3 Foundation Multisig | +| Curator | Api3 Foundation | +| Allocator | Api3 allocation bot and Api3 Foundation Multisig | +| Sentinel | Api3 monitoring team | -The Api3 Foundation Multisig holds the owner, curator, and allocator roles, consolidating governance and operational control under a single entity whose express mission is the development, operation, and maintenance of Api3 services and operations. Role names correspond to terminology in underlying smart contracts and protocols, and do not carry any legal nor other significance or meaning. +All four roles are controlled by Api3, consolidating governance and operational control under a single entity whose express mission is the development, operation, and maintenance of Api3 services and operations. The Api3 Foundation Multisig holds the owner role, which controls top-level permissions and appoints the curator and sentinels. The curator configures risk parameters - enabled markets, supply caps, fees, and interest rate limits. The allocator role, held by an automated Api3 bot alongside the multisig, moves capital between enabled markets. Role names correspond to terminology in underlying smart contracts and protocols, and do not carry any legal nor other significance or meaning. -The guardian role is operated by the Api3 monitoring team, who can revoke pending actions in case of misconfiguration. +The sentinel role is operated by the Api3 monitoring team, who can reactively reduce risk - deallocating assets, decreasing caps, or revoking pending timelocked actions - in case of misconfiguration or adverse market conditions. The monitoring team also maintains an emergency fund for manual liquidations in the event that automated liquidation bots fail. Api3 provides no guarantee of the effectiveness or sufficiency of such bots or emergency fund's operation. ## Vault architecture -All Api3 vaults follow a two-layer architecture: +Each Api3 vault is a [Morpho Vault V2](https://docs.morpho.org/learn/concepts/vault-v2/) that supplies USDC directly to a curated set of isolated Morpho markets: ``` -Depositor → V2 Vault → V1 Vault → Morpho Markets +Depositor → Vault → Adapter → Morpho Markets ``` -1. **V2 Vault** — The user-facing vault where depositors supply USDC and receive vault shares. Configured with the Api3 role structure and governance controls described above. +Depositors supply USDC to the vault and receive vault shares. The vault routes capital into the underlying Morpho markets through a market adapter, and the Api3 role structure and governance controls described above apply at the vault level. The 5% performance fee is charged here (see [Fees](/curation/#fees)). -2. **V1 Vault** — The intermediary vault that executes the actual market allocations. The V1 vault holds two allocators: - - The **Morpho Public Allocator**, which enables permissionless reallocation to improve liquidity across markets. - - An **Api3 automated bot** that rebalances allocations to maintain a competitive APY across all enabled markets. - -The owner of the V1 vault parameter adjustment abilities is also the Api3 Foundation Multisig. The 5% performance fee is charged at this layer (see [Fees](/curation/#fees)). +Changes that could increase risk to depositors - adding a market adapter or raising a supply cap - are subject to a 7-day timelock, giving depositors advance notice before they take effect. The sentinel can act immediately to reduce risk. ## Allocation and rebalancing Capital allocation across markets is automated. The Api3 allocation bot monitors market conditions and rebalances the vault's positions to maintain target utilization and competitive APY. -The Morpho Public Allocator complements this by enabling permissionless reallocation when liquidity is needed. +When an enabled market lacks borrowing demand, the bot can supply the vault's otherwise-idle USDC to a deep, blue-chip market (such as wstETH/USDC) so that it continues to earn yield. -A portion of vault deposits is kept idle to assist with depositor withdrawals and mitigate delays, but does not guarantee delay-free withdrawal. +A portion of vault liquidity is kept readily withdrawable to assist with depositor withdrawals and mitigate delays. In addition, the Vault V2 design lets anyone permissionlessly pull supplied liquidity back from a market into the vault - a forced deallocation, subject to a small penalty - when liquidity is needed. Neither mechanism guarantees delay-free withdrawal. ## Monitoring From 154d291e14858598f02d7644424d66c2d039f5e0 Mon Sep 17 00:00:00 2001 From: =?UTF-8?q?Emanuel=20Tesa=C5=99?= Date: Tue, 9 Jun 2026 13:09:44 +0200 Subject: [PATCH 2/3] Add missing information --- docs/curation/disclosure.md | 2 +- docs/curation/index.md | 10 ++++++++++ docs/curation/risk-management.md | 20 ++++++++++++++++++++ 3 files changed, 31 insertions(+), 1 deletion(-) diff --git a/docs/curation/disclosure.md b/docs/curation/disclosure.md index fcf78e35..6d5961f0 100644 --- a/docs/curation/disclosure.md +++ b/docs/curation/disclosure.md @@ -38,7 +38,7 @@ Interacting with Api3-curated vaults involves significant risks. These include, - **Market risk** — Collateral assets may experience extreme volatility or illiquidity, leading to bad debt in the underlying lending markets that cannot be fully liquidated. - **Smart contract risk** — Vulnerabilities or bugs in the Morpho Protocol, the collateral tokens, the oracle infrastructure, or any other contract in the stack may result in partial or total loss of funds. - **Oracle risk** — Although Api3 operates as the oracle provider for its own markets, oracle systems can fail, be manipulated, or behave unexpectedly during adverse market conditions. -- **Parameter and governance risk** — Market configurations, supply caps, role assignments, and other parameters may be changed. Such changes may adversely affect vault performance or withdrawal availability. +- **Parameter and governance risk** — Market configurations, supply caps, role assignments, and other parameters may be changed. Changes that increase risk to depositors, such as adding markets or raising supply caps, are subject to a timelock to ensure users have enough time to review the changes. - **Liquidity risk** — Under stressed market conditions, withdrawals may be temporarily delayed pending the availability of idle liquidity or successful rebalancing across markets. - **Regulatory risk** — Legal and regulatory treatment of vaults, tokenized positions, and DeFi lending may change in ways that adversely affect users. diff --git a/docs/curation/index.md b/docs/curation/index.md index 58e2914d..01b3a28b 100644 --- a/docs/curation/index.md +++ b/docs/curation/index.md @@ -73,6 +73,16 @@ While preserving the inherent voting power of the underlying COMP, this wrapper The Api3 dCOMP vault supplies the USDC borrow-side liquidity for this market, making the mechanism viable. +### Accessing the vaults + +All three vaults are deployed on Ethereum mainnet and can be viewed and accessed through the Morpho app, where Api3 operates as a [verified curator.](https://forum.morpho.org/c/vaults/api3/57) Live figures - total deposits, APY, enabled markets, and current supply caps - are shown there. + +| Vault | Address | Link | +| ---------- | -------------------------------------------- | --------------------------------------------------------------------------------------------------- | +| Api3 Core | `0xe2221Aa07ec3266DA87763E2b1e28d07A8a4e53b` | [View on Morpho](https://app.morpho.org/ethereum/vault/0xe2221Aa07ec3266DA87763E2b1e28d07A8a4e53b) | +| Kabu | `0x54210d3f1A066413891AF9E17210E787d5C6e3f4` | [View on Morpho](https://app.morpho.org/ethereum/vault/0x54210d3f1A066413891AF9E17210E787d5C6e3f4) | +| Api3 dCOMP | `0x36cfe1568461E499391ef0A555300F1ae2da2439` | [View on Morpho](https://app.morpho.org/ethereum/vault/0x36cfe1568461E499391ef0A555300F1ae2da2439) | + ## Fees Each Api3 vault charges a single **5% performance fee** on the interest earned from borrowers (see [vault architecture](/curation/roles-and-operations#vault-architecture)). diff --git a/docs/curation/risk-management.md b/docs/curation/risk-management.md index e7ab5b7c..5a53404d 100644 --- a/docs/curation/risk-management.md +++ b/docs/curation/risk-management.md @@ -36,6 +36,20 @@ Supply caps are set according to Api3's internal risk guidelines and are calibra Caps are reviewed and adjusted as market conditions evolve. +## Oracles + +Every lending market relies on a price feed to value collateral and trigger liquidations. The markets Api3 creates and curates are priced by Api3's own data feeds, read on-chain through [Api3ReaderProxyV1](/dapps/integration/contract-integration). + +These are first-party feeds: prices are signed by the data sources themselves, with no third-party node operators sitting between the source and the chain. Removing that intermediary layer eliminates a common source of oracle manipulation and downtime, and underpins Api3's track record of never misreporting a data feed. This considerably reduces the oracle risk that depositors are exposed to compared with markets that rely on third-party oracles. + +Because Api3 is both the curator and the oracle provider for these markets, the party setting risk parameters and the party operating the price feed are one and the same. Api3 also captures the [Oracle Extractable Value (OEV)](/oev/) generated during liquidations as protocol revenue. + +## Smart contract security + +The vaults are built on Morpho's audited contracts. Morpho Blue (the underlying market protocol), the Morpho Vault V2 standard, and the market adapter through which the vaults supply liquidity have each been reviewed by multiple independent firms, including Spearbit, OpenZeppelin, Zellic, ChainSecurity, and Certora. The full list is published in [Morpho's audit overview.](https://docs.morpho.org/overview/resources/audits/) + +The [dCOMP](https://github.com/api3dao/dcomp) wrapper used by the Api3 dCOMP vault is an intentionally minimal, source-verified contract built by Api3 and provided as-is. As with any smart contract, residual risk remains; see the [disclosure](/curation/disclosure#risks) for the full statement on smart contract risk. + ## Treasury-backed risk alignment A distinguishing feature of Api3's curation is that Api3 deploys a majority of its own treasury as vault supply. @@ -46,3 +60,9 @@ This creates a direct alignment of incentives: - External depositors benefit from the same risk management applied to protect the Api3 treasury. This "skin in the game" model stands in contrast to curators who manage exclusively third-party capital with limited personal exposure to their risk decisions. + +## Bad debt and shortfalls + +A lending market incurs bad debt when a borrower's collateral can no longer cover their debt and the position cannot be fully liquidated - typically during sharp price moves or when collateral liquidity dries up. Conservative supply caps, LLTV settings, and healthy [liquidation markets](/curation/roles-and-operations#liquidations) are the primary defenses against this. + +When bad debt does occur in a Morpho market, it is borne proportionally across all of that market's suppliers. Because Api3 supplies the majority of each vault from its own treasury, it is the largest supplier and absorbs the largest share of any such loss. This is the practical meaning of Api3's [skin in the game](/curation/#skin-in-the-game): it is an alignment of incentives, not a backstop, and Api3 does not commit to compensate third-party depositors for losses (see the [disclosure](/curation/disclosure#no-guarantees)). From c259518d721747b2e8ee28eff4b4970021b0830d Mon Sep 17 00:00:00 2001 From: =?UTF-8?q?Emanuel=20Tesa=C5=99?= Date: Tue, 9 Jun 2026 13:10:39 +0200 Subject: [PATCH 3/3] Lint --- docs/curation/index.md | 10 +++++----- 1 file changed, 5 insertions(+), 5 deletions(-) diff --git a/docs/curation/index.md b/docs/curation/index.md index 01b3a28b..2def6544 100644 --- a/docs/curation/index.md +++ b/docs/curation/index.md @@ -77,11 +77,11 @@ The Api3 dCOMP vault supplies the USDC borrow-side liquidity for this market, ma All three vaults are deployed on Ethereum mainnet and can be viewed and accessed through the Morpho app, where Api3 operates as a [verified curator.](https://forum.morpho.org/c/vaults/api3/57) Live figures - total deposits, APY, enabled markets, and current supply caps - are shown there. -| Vault | Address | Link | -| ---------- | -------------------------------------------- | --------------------------------------------------------------------------------------------------- | -| Api3 Core | `0xe2221Aa07ec3266DA87763E2b1e28d07A8a4e53b` | [View on Morpho](https://app.morpho.org/ethereum/vault/0xe2221Aa07ec3266DA87763E2b1e28d07A8a4e53b) | -| Kabu | `0x54210d3f1A066413891AF9E17210E787d5C6e3f4` | [View on Morpho](https://app.morpho.org/ethereum/vault/0x54210d3f1A066413891AF9E17210E787d5C6e3f4) | -| Api3 dCOMP | `0x36cfe1568461E499391ef0A555300F1ae2da2439` | [View on Morpho](https://app.morpho.org/ethereum/vault/0x36cfe1568461E499391ef0A555300F1ae2da2439) | +| Vault | Address | Link | +| ---------- | -------------------------------------------- | -------------------------------------------------------------------------------------------------- | +| Api3 Core | `0xe2221Aa07ec3266DA87763E2b1e28d07A8a4e53b` | [View on Morpho](https://app.morpho.org/ethereum/vault/0xe2221Aa07ec3266DA87763E2b1e28d07A8a4e53b) | +| Kabu | `0x54210d3f1A066413891AF9E17210E787d5C6e3f4` | [View on Morpho](https://app.morpho.org/ethereum/vault/0x54210d3f1A066413891AF9E17210E787d5C6e3f4) | +| Api3 dCOMP | `0x36cfe1568461E499391ef0A555300F1ae2da2439` | [View on Morpho](https://app.morpho.org/ethereum/vault/0x36cfe1568461E499391ef0A555300F1ae2da2439) | ## Fees