Capacity Model
Capacity is the amount of creation or redemption flow a product can process while maintaining target exposure, avoiding excessive cash drag, limiting adverse selection, and staying within execution and settlement constraints.
Capacity is dynamic, product-specific, and separate from TVL. Creation capacity and redemption capacity can differ because they depend on different asset, execution, and settlement conditions.
Capacity Inputs
| Capacity input | Why it matters |
|---|---|
| Underlying market depth | Determines how much exposure can be sourced or unwound without pushing the product outside its intended risk controls. |
| Idle pUSD | Affects create and redeem readiness, cash drag, and the ability to settle queued obligations. |
| Solver availability | Determines whether basket changes can be executed within the product constraints. |
| NAV freshness | Prevents flow against stale or incomplete accounting inputs. |
| Reconciliation state | Ensures vault balances, shares, positions, NAV, and product state are mutually consistent. |
| Product risk limits | Prevents flow that exceeds pilot controls or product-specific boundaries. |
Capacity Is A Control
Limited capacity is not a defect in the product model. It is the mechanism that lets PMF refuse flow when accepting that flow could transfer value between new and existing shareholders, increase tracking error, or force execution against unsuitable market conditions.
Quote Refusal
PMF may refuse a creation or redemption quote when requested size exceeds available capacity, NAV inputs are stale, solver readiness is degraded, market data is incomplete, settlement checks fail, or reconciliation has not confirmed the product state.