> ## Documentation Index
> Fetch the complete documentation index at: https://docs.exponent.finance/llms.txt
> Use this file to discover all available pages before exploring further.

# Strategy Vaults

***

This page details the protocol architecture of Strategy Vaults. For a user guide on depositing and withdrawing, see [Using Strategy Vaults](/user-documentation/strategy-vaults).

## Architecture

An Exponent Strategy Vault is an onchain program that holds depositor assets and executes yield strategies across Exponent's rate markets and integrated protocols. Each vault consists of:

| Component         | Description                                                            |
| ----------------- | ---------------------------------------------------------------------- |
| Vault program     | Smart contract managing deposits, withdrawals, and position accounting |
| Manager           | A whitelisted address authorized to execute strategy operations        |
| Onchain policies  | Squads smart account constraints defining the vault's risk envelope    |
| Vault share token | SPL token representing proportional ownership of the vault's AUM       |

## Onchain Policy Governance

Vault managers operate within strict onchain constraints enforced by policies via Squads smart accounts. These policies are not guidelines, they are programmatic rules that the smart contract enforces at execution time. The manager cannot submit transactions that violate the defined policies.

Configurable policy parameters include:

| Policy             | Function                                                                            |
| ------------------ | ----------------------------------------------------------------------------------- |
| Asset whitelist    | Restricts vault holdings to specified assets only (e.g. only JitoSOL, mSOL, JupSOL) |
| Protocol whitelist | Limits interactions to approved protocols (e.g. Exponent order book only)           |
| Timelock           | Requires a waiting period (typically 7 days) for any parameter modification         |

This architecture separates the risk envelope (defined by policies) from strategy execution (performed by the manager). Depositors evaluate the policies and constraints, not the manager's discretion.

## Vault Index and Share Pricing

Vault share tokens represent a proportional claim on total AUM. The vault index tracks the value of all positions held:

* Market value of PT and YT positions
* Unrealized PnL from open order book quotes
* Accrued yield and trading fees
* Value of underlying assets held
* Pending withdrawals

When depositing, shares are minted at the current index. When withdrawing, shares are burned at the current index. This ensures fair pricing for entries and exits relative to the vault's actual asset value.

## Withdrawal Queue

Vault withdrawals follow a queue mechanism to protect remaining depositors from adverse selection:

<Steps>
  <Step title="Queue withdrawal">
    Depositor requests withdrawal, specifying shares to redeem.
  </Step>

  <Step title="Manager fills">
    Manager unwinds positions to generate the underlying asset for the withdrawal.
  </Step>

  <Step title="Execute withdrawal">
    Depositor claims the underlying asset.
  </Step>
</Steps>

The queue exists because vault positions (open order book quotes, active LP positions) may need to be unwound before assets can be returned. Immediate withdrawals could force unfavorable position exits that reduce value for remaining depositors.

## Governance and Proposals

Vault parameters can be modified through a timelocked proposal system:

1. Manager or governance participant proposes an action (e.g. adding a new whitelisted asset, changing a policy parameter)
2. The proposal enters the timelock period (typically 7 days)
3. Stakeholders can evaluate the proposal during the timelock — depositors can exit if they disagree
4. After the timelock expires, the proposal can be executed

This provides full transparency and exit opportunity before any material change takes effect.

## Security Overview

The full audit coverage for the vault infrastructure:

| Component                                  | Auditors                              |
| ------------------------------------------ | ------------------------------------- |
| Exponent Vault Program                     | Adevar Labs, OtterSec, Certora        |
| Squads Smart Accounts (policy enforcement) | OtterSec, Offside Labs, Certora       |
| Exponent Core & related programs           | OtterSec, Offside Labs, Certora, Sec3 |

All the Exponent audit reports are publicly available at [github.com/exponent-finance/exponent-audits](https://github.com/exponent-finance/exponent-audits).