Core Architecture

Term Strategy Vaults integrate Yearn V3's ERC-4626 tokenized vault architecture with TERM's fixed-rate lending markets. This integration automates the management of fixed-income positions while maintaining standardized vault interfaces and robust risk controls.

This documentation, accompanied by a detailed diagram, outlines the fundamentals of Yearn V3's architecture and the specific adaptations for Term Finance. It focuses on three key layers:

Architecture Layers

1. TokenizedStrategy (Yearn V3): A centralized ERC-4626 implementation contract that manages deposits, withdrawals, accounting, and profit locking across all Yearn V3 strategies.

2. BaseStrategy (Yearn V3): The foundational component for custom strategies, delegating ERC-4626 functionality to the TokenizedStrategy contract while standardizing vault storage setup.

3. Custom Strategy (Term Finance): Extends BaseStrategy with protocol-specific logic and storage to implement TERM functionality, such as repo token management, auction participation, and portfolio constraints, while leveraging inherited vault mechanics.

The accompanying diagram illustrates Yearn V3's separation of vault logic and storage:

• TokenizedStrategy Contract: Centralized implementation of ERC-4626 logic for all strategies.

• BaseStrategy Contracts: Proxy contracts delegating ERC-4626 calls to TokenizedStrategy via fallback functions while maintaining standardized vault storage for shares, balances, and profit mechanics.

• Custom Strategies: Inheriting and extending BaseStrategy to incorporate TERM-specific features.

Key Features of Term Strategy Vaults

1. Core Integration: Deploying funds to Yearn vaults, managing withdrawals, and reporting profits

2. Portfolio Valuation: Tracking repo token present values and open auction offers

3. Protocol Interactions: Participating in TERM auctions and managing repo token positions

4. Portfolio Constraints: Enforcing concentration limits, reserve ratios, and maturity thresholds

Through this modular architecture, Term Strategy Vaults combine standardized ERC-4626 vault mechanics with custom fixed-income portfolio management. Each Term strategy operates within an isolated storage context while leveraging the shared ERC-4626 implementation, ensuring security, flexibility, and capital efficiency.