Net Asset Value (NAV) is the backing per token — risk-free treasury value divided by total supply. The protocol holds one invariant above all: every VAULT is at all times backed by at least 1 USDG of risk-free value. Treasury-held VAULT is valued at that 1 USDG floor, never at market price.
The market price is a time-weighted average (TWAP) from the VAULT/USDG pair. The premium the market pays over backing is simply:
The oracle is fail-closed: readings require a valid observation window, and outside it every dependent operation reverts. The fund will not act on a stale price.
Dividends are emissions to enrolled shareholders (sVAULT), paid every epoch. The rate is a pure function of the premium — and it is immutable:
| Constant | Value | Meaning |
|---|---|---|
| R_MAX | 0.45% / epoch | maximum dividend, per 8-hour epoch |
| K | 1.75× | premium at which the rate saturates |
| Epoch | 8 hours | three distributions per day |
In words: at or below NAV, the dividend is zero. At a 1.75× premium or higher, it pays the full 0.45% per epoch. Between, it interpolates linearly. The fund pays out precisely the confidence the market extends to it — no more, no less.
The distributor can never mint past the treasury's risk-free value. If a distribution would push supply × 1 USDG above reserves, it clamps to the cap. The backing invariant is enforced automatically, every epoch — the printing press is wired to the vault door.
The Direct Purchase Plan buys VAULT at the exchange route, less a 5% trading tax. The tax splits to the buyback program, the treasury, and the team; proceeds accrue to reserves. The protocol always quotes around NAV from both sides — a standing buyback bid at NAV − 1.5% below, and bonds at or above NAV above.
Bonds sell VAULT for USDG at a discount to market, priced with a hard NAV floor:
Because the floor is NAV, a bond can never sell VAULT below its existing backing — every subscription is strictly accretive. Discount is 6.5%; notes vest over 2 days.
Loopback lets an enrolled shareholder borrow USDG against their sVAULT, buy more VAULT, and enroll it — a leverage loop in one transaction.
Leverage cuts both ways. If the premium collapses toward NAV the dividend falls to zero while the loan does not; the health meter shows your remaining headroom. This is the sharpest instrument in the fund. Treat it like one.
VAULT is the fund's share. sVAULT is the enrolled, dividend-bearing form; redemption between them is 1:1 and immediate. The contract address appears in the app the moment the fund is live — trust only the address shown at the app.
The entire mechanism — NAV, premium, dividends, bonds, buyback, and Loopback — runs on the policy described above, with the reserve invariant enforced at every epoch. The math is exactly as written; there are no hidden owner functions in the emissions path. Do your own research before participating.