# Set rehypothecation

Curators can change the rehypothecation setting of their markets via the Curator Dashboard.&#x20;

### 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*](https://docs.napier.finance/learn/protocols/markets-napier-amm/rehypothecation).
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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](https://docs.morpho.org/curate/#morpho-curation)
* Euler - [Creator Tool](https://docs.euler.finance/creator-tools/)
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### **Step 4: Enable the** Rehypothecation

<div align="left" data-with-frame="true"><figure><img src="https://4277771176-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2FGPkrMXT982thgzhBdzF8%2Fuploads%2FrseL0cccaQ96KVb1LARY%2FSection%20(3).png?alt=media&#x26;token=31a4a802-ffd9-4a8c-a89b-c33bc6de1027" alt="" width="375"><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 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%**.

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**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.
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#### **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;

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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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