Vault TVL Scaling Limits

The vault's maximum viable TVL is determined by the liquidity depth of available prediction markets.

Critical operational constraint

These limits are real and must be communicated to the house operator. Oversizing the vault relative to available market liquidity breaks the system's pricing assumptions and creates phantom NAV based on illiquid positions.

Scaling Table

Market Depth Category	NO-Side Depth	Vault Max TVL	Active Slots
Shallow markets	\(1M–\)3M	\(500K–\)1.5M	1–2 markets feasible simultaneously
Medium markets	\(3M–\)10M	\(1.5M–\)5M	Can fill 2–4 slots comfortably
Deep markets	$10M+	\(5M–\)15M	Full 4-slot operation feasible

How to Use This Table

1. Survey available markets and their NO-side liquidity depth
2. Identify the worst-case market (shallowest) you expect to use
3. Apply the corresponding TVL limit as the vault's operational ceiling
4. Communicate this ceiling to depositors and the house operator before accepting deposits beyond it

Why This Is a Hard Limit

The 10% open interest rule (from Market Selection) directly ties maximum position size to market depth. The vault TVL limit follows from summing across 4 positions × 15% reserve requirement:

maxTVL ≈ (4 × marketDepthLimit) / 0.85

// Shallow: $3M depth → 4 × $300K / 0.85 ≈ $1.4M max TVL
// Medium:  $10M depth → 4 × $1M / 0.85 ≈ $4.7M max TVL
// Deep:    $30M depth → 4 × $3M / 0.85 ≈ $14M max TVL

Growth Path

As the vault grows and deeper markets become necessary, the operator must: 1. Pre-screen new venues for sufficient liquidity before accepting new deposits 2. Delay opening new deposit windows if no suitable markets exist at the required depth 3. Not accept deposits that would push the vault beyond what available markets can absorb