# Term Strategy Vaults ### Term Strategy Vaults - Technical Architecture Term Strategy Vaults implement the ERC-4626 standard tokenized vault interface built on Yearn V3's modular strategy framework. This enables seamless integration with DeFi protocols while inheriting Yearn's battle-tested security features and access controls. ### Capital Efficiency and Liquidity Management Term Strategy Vaults implement an automated liquidity management strategy between fixed-rate TERM markets and variable rate lending protocols. This maximizes capital efficiency by optimizing yield on idle funds while maintaining liquidity for upcoming deployments and withdrawals. ### Portfolio Risk Framework The vault enforces key risk controls through smart contract parameters: * ***Portfolio Maturity Cap***: Maximum weighted average duration limit across all loans manages overall portfolio duration. * ***Collateral Standards***: Whitelisted assets must maintain minimum collateral ratios, ensuring quality and protection against defaults. * ***Concentration Limits***: Fixed per-loan exposure cap ensures portfolio-wide diversification, minimizing the impact of any individual loan default. * ***Reserve Requirement***: Fixed, e.g. 20%, reserve ratio maintains adequate liquidity buffer for redemptions and new lending opportunities. ### Governance Structure The protocol employs a two-tiered governance structure where curators set operational parameters while LP token holders have ultimate authority to veto any proposed changes to risk parameters, collateral standards, and protocol configurations. This enables adaptive management while maintaining core risk principles through smart contract enforcement. --- # 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://developers.term.finance/periphery-contracts/curated-vaults.md?ask= ``` 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.