Scarcity-Durability Framework (SDF)

Scarcity-Durability Framework (SDF) is the allocation instrument within Applied Capital Architecture. Where Scarcity-Adjusted PEG (sPEG) governs valuation — what a structurally scarce asset is worth — SDF governs allocation: whether that scarcity is durable enough, and the rent retainable enough, to size into.

Its founding distinction is that scarcity and durability are not the same thing. A real shortage can produce real pricing power that does not survive the cycle, because the same scarcity that creates the rent attracts the capacity that destroys it. Memory is the canonical case: the scarcity is real, the pricing power is real, and it has never once been durable across a full cycle.

SDF scores an asset on three axes:

• Supply-side moat — is the advantage structural (years and tens of billions to replicate) or merely a temporary supply lag that self-corrects? The two look identical for two to three years, then diverge.
• Rent retention — even where the moat holds, is the owner permitted to keep the surplus, or is there a regulator, ratepayer, or counterparty structurally entitled to claw it back? Moat depth and rent capture are different questions, and they diverge most exactly where conviction is highest.
• Counterparty concentration — is demand exogenous and diversified, or anchored to a small number of large commitments that can be renegotiated? A concentrated anchor-tenant exposure is the fastest, least-monitorable break, so it caps position size regardless of how strong the moat appears.

These scores resolve into a horizon-dependent position-size ceiling. On a multi-year hold, only structural moats earn size. On a shorter trade window, scarcity and liquidity dominate the sizing — but the counterparty haircut is a hard override in both, because the discipline sizes to survive a break, not to dodge it.

SDF is a structural reference layer for capital allocation, not an investment product, a performance claim, or a solicitation.