Fund Documents · 04 of 08

Treasury and NAV

The Treasury custodies the reserves, is the sole minter of record, and computes the two numbers everything keys off: RFV and NAV.

1. Reserve policy¶

The reserve asset is USDG, and only USDG. Reserves are valued in USDG terms. There is no second reserve asset, no side portfolio and nothing held for the protocol's benefit outside the trustless Treasury. That is the whole balance sheet, and it is the reason the Edition N label exists.

2. Yield deployment: Morpho¶

Idle treasury USDG earns yield in Morpho, live on Robinhood Chain, under a hard deployment cap:

• At most 70% of treasury USDG may be deployed to Morpho at any time.
• The ≥30% liquid remainder must always cover pending offering payouts plus restore-point capacity. A withdraw path exists so those obligations can always be met, even if it means unwinding Morpho.
• The rebalance toward the cap is formulaic and permissionless. Anyone may trigger it; the formula decides. The cap has no override.

3. RFV and NAV¶

RFV = liquidUSDG × 1.0
    + morphoPositionUSDG × (1 − 2%)         MORPHO_HAIRCUT_BPS = 200
    + rfvOfPOL

rfvOfPOL = 2·√(x·y) × treasuryLpShare        x = USDG reserves, y = RPT reserves
NAV      = RFV / totalSupply

The liquidity line is the fund's standing valuation rule, worth saying in words: treasury-owned RPT is valued at its 1 USDG floor, never at market price. The 2·√(x·y) convention prices the LP position as if the RPT leg were worth exactly its floor. It is also the manipulation-resistant choice: k = x·y is invariant under third-party swaps, so no trader can push NAV down by trading against the fund's pool. Swap fees only grow k, so the liquidity contribution to RFV only rises, and the valuation is flash-loan resistant by construction.

The 2% haircut prices smart-contract and liquidity risk on the deployed position: reserves earning yield are counted as slightly less than face, on purpose. RFV is the number the emissions cap enforces against: totalSupply × 1 USDG ≤ RFV, always.

NAV rises structurally from four flows, none of which needs a premium to exist:

1. Morpho yield on deployed reserves.
2. Trading-fee inflows, the treasury share of the 5% fee, all of it after day 30.
3. Restore-point burns: buying RPT below NAV and burning it shrinks supply faster than reserves.
4. Premium-sale sweeps: selling RPT above 2× NAV brings in more than 2 USDG of backing per share issued.

4. The restore point (inverse bonds): the standing bid¶

The restore point is a standing, seller-initiated bid. Any holder may at any time sell RPT directly to the InverseBond contract at a TWAP-settled price of

payoutPerRPT = NAV × (1 − 1.5%)          INVERSE_SPREAD_BPS = 150

• No trigger, no operator, no waiting. The bid simply exists. Hitting it is rational only when the market trades below NAV − 1.5%, which is exactly when a floor bid should be hit.
• All RPT received is burned. Every fill pays out below backing, so every fill raises NAV.
• Capacity per epoch: 1% of liquid (non-Morpho) treasury reserves, recomputed each epoch. Unused capacity does not roll over.
• Settlement inputs are TWAP-consistent snapshots; there are no spot-manipulable reads.

5. Premium sales: the ask¶

When the TWAP exceeds NAV × 2.0, anyone may call PremiumSeller.execute(). It sells a small clip of newly minted RPT into the canonical pool and sweeps the USDG proceeds to the Treasury.

• The 2.0× threshold is deliberately above the K = 1.75 full-distribution mark: the treasury sells only after the distribution throttle is already maxed, into euphoria, never competing with its own emissions curve.
• Clip size: 25 bps of the pool's RPT reserves per execution, with a minimum 1-hour interval and TWAP-bounded slippage. Small, slow, formulaic.
• Every share sold above 2× NAV brings in more than 2 USDG against a 1 USDG floor obligation: strictly accretive and trivially inside the RFV cap.

6. Holdings¶

This table is the disclosure of record until the Shareholder Console's on-chain holdings view supersedes it. There is no third row.