> For the complete documentation index, see [llms.txt](https://jpydf.gitbook.io/jpy-defi/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://jpydf.gitbook.io/jpy-defi/collateral-and-pricing/strategies.md).

# Collateral Strategies

A **Strategy** is a component that deploys a branch's underlying asset into one external venue. Strategies connect to the dToken Vault and are invisible to the Core. Their gains and losses are reflected in Vault accounting.

## Current venues

* **dwstETH**: Not deployed externally; the full amount stays in the Vault.
* **dUSDC**: The amount above the liquidity buffer can be deployed in Aave V3 and a Morpho V2 vault.

Only venues approved by governance can be used. Governance can add, disable, and replace venues.

## How funds move

The Vault allocates the underlying asset to venues, and a multisig with the operating role sends principal and yield back to the Vault. Recovery is not automatic, and a user's withdrawal request does not cause funds to return from a venue.

## Losses and emergencies

* If a venue's valuation falls below principal, the dToken [backing ratio](/jpy-defi/collateral-and-pricing/dtoken.md) can fall and lower the collateral valuation. Losses not visible in the valuation are reflected when governance confirms the loss. Temporary illiquidity alone is not treated as a loss.
* A loss lowers that branch's backing ratio and can affect the value of JPYdf, which is shared by all branches.
* Governance can stop new allocations, emergency-disable a venue, and pull recoverable funds back to the Vault. Whether and when recovery succeeds is not guaranteed. Emergency-disabling a venue and confirming a loss also pause dToken deposits, in-kind redemptions, and claims ([Governance & Timelock](/jpy-defi/governance/governance-and-timelock.md)).