# Set Rehypothecation

Curators can change the rehypothecation setting of their markets via the Curator Dashboard. 

### Using the Curator App

Follow the steps below to change the rehypothecation settings:

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### Step 1: Preparation

* Access the **Curator Dashboard**.
* If your account is not verified, complete verification under [**Verify Your Account**](/curate/napier-curation/verify-curator-account.md).
* If you haven’t created a market yet, follow the steps in [**Create Market**.](/curate/napier-curation/create-market-napier-amm.md)
* If you haven’t assigned a Developer role yet, follow the steps in[ **Role Allocation**](/curate/napier-curation/manage-market/role-allocation.md)
  {% endstep %}

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### **Step 2: Learn How it Works**

* If you’re not yet familiar with how rehypothecation works, see [*How Rehypothecation Works*](/learn/protocols/markets-napier-amm/rehypothecation.md).
  {% endstep %}

{% step %}

### **Step 3: Prepare supported vaults**

* Before enabling rehypothecation, ensure that a vault is configured to receive both the PT and the underlying deposit.
* You may also create your own rehypothecation vault on supported platforms such as Morpho, Euler, or Gearbox.
* Curators can add rehypothecation vaults permissionlessly. However, the following constraints apply. Please note that this action may significantly alter the user’s risk profile.

{% hint style="info" %}

#### **For Curators: Rehypothecation Vault Criteria**

The target vault must satisfy the following conditions:

* Compliant with the **ERC4626** standard.
* Withdrawals must be permitted at any time (no lock-up mechanisms or pause functionality).
* No flat fees on deposits or withdrawals.
* Dynamic deposit or withdrawal fees are strongly discouraged.
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### **Step 4: Enable the** Rehypothecation

<div align="left" data-with-frame="true"><figure><img src="/files/yO01hncneGzVGiQG6Ohk" alt="" width="563"><figcaption></figcaption></figure></div>

Napier AMM consists of the underlying asset and its PT, so you must decide **which vaults** to allocate them to and **how much percentage** of each to allocate.

#### Set an allocation Ratio

* Use the **“Allocate % of PT-cUSDO to a vault”** slider to set what percentage of the pool’s total assets will be rehypothecated into an external vault.
  * **Min (ϕmin)** – The minimum percentage of total assets that must be rehypothecated.
  * **Max (ϕmax)** – The maximum percentage of total assets that can be rehypothecated.
  * **Target (ϕtarget)** – The desired percentage of total assets to be rehypothecated.
* If you are **not using rehypothecation**, you can simply set **Min**, **Max**, and **Target** all to **100%**.

{% hint style="danger" %}

#### **For Curators: Rehypothecation Behavior & Risks**

When you assign tokens to **rehypothecation**, any trade that needs that liquidity will **atomically withdraw → use → resupply** those tokens.

**What this means for you (and your users):**

* **Higher gas for traders/LPers** due to the extra withdraw/resupply steps.
* **Revert risk** if tokens can’t be withdrawn at the moment of execution.
* **Bad-debt/insolvency risk** if withdrawals fail or liquidity is otherwise unavailable.

**Operational guidance:**

* Set prudent **caps** and maintain **liquidity buffers**.
* Monitor **utilization** and configure **pause/guardrails** for stress scenarios.
* Prefer **reliable vaults** for rehypothecation allocations.
* Communicate these trade-offs clearly to market participants.
  {% endhint %}

#### **Select a Vault**

* Click **Select a vault** to choose the destination vault (e.g., *MEV Capital USDC*).

#### **Lock Settings**

* Enabling **Lock rehypothecation settings** prevents any further changes to vault selection or allocation ratios.&#x20;

{% hint style="info" %}
This lock can also be activated after the market has been deployed. This design ensures transparency for liquidity providers while improving operational efficiency for advanced use cases such as **PT looping**.
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