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.

• If you haven’t created a market yet, follow the steps in Create Market.

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Step 2: Learn How it Works

• If you’re not yet familiar with how rehypothecation works, see How Rehypothecation Works.

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Step 3: Prepare supported vaults

Before enabling rehypothecation, make sure you’ve set up the vaults that will receive your PT and underlying deposits.

Follow the appropriate guide for each protocol:

• Morpho - Morpho Curation

• Euler - Creator Tool

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Step 4: Enable the Rehypothecation

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 slider labeled “Allocate % of PT-cUSDO to a vault” to define what portion of the pool’s assets is lent to an external vault.

  • Min (ϕmin) – Minimum ratio of raw tokens to total balance.

  • Max (ϕmax) – Maximum ratio of raw tokens to total balance.

  • Target (ϕtarget) – Target ratio of raw tokens to total balance.

• If you are not using rehypothecation, you can simply set Min, Max, and Target all to 100%.

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• Revert risk if tokens can’t be withdrawn at the moment of execution.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.

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.

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.