Tokenised Revenue Distribution

an implementation of tokenised yield bonds based on a typical synthetic staking contract.

The tokenised-yield-bonds program has not yet been released and is in active development.

The Tokenised Revenue Distribution program is a public source offering within the Reflect-Program-Library and was designed to build upon 'The Internet Bond' a liquid receipt token based rewards vault for the Ethena Protocol's distribution of revenue.

Core Concepts

The tokenised revenue distribution program operates on a few core principles that enable many concurrent distribution vaults to operate smoothly and securely.

• Tokenised Revenue Distribution

• The Treasurer

  1. the "Treasurer" is the initialiser and authority of the vault. They are limited to very secure actions that do not impose risk on depositors. These are:

     1. changing the "target interest rate."

     2. depositing reward redemption tokens.

  2. Similar to the central bank, the treasurer can only state targets and attempt to meet them through deposits. This implies accountability.

• The Vault and its Pools

  1. The vault is initialised by the treasurer with a target interest rate, a deposit pool, a reward pool, and the minimum lockup time for redeeming yield.

  2. Once the vault is initialised, the minimum lockup time for redeeming yield cannot be changed to ensure deposit social contract enforceability.

  3. while users deposit their tokens into the deposit pool, they withdraw from a combination of the reward pool and deposit pool. The pool ratios determine the rate.

note - notice how RTB splits the yield and the principle natively, this ensures further security where withdrawals do not have the potential to bleed into others capital.

• Receipt Tokens

  1. receipt tokens are returned to the depositor at a ratio determined by an algorithm consisting of the current total receipt size, deposit size, deposit pool and reward pool. This ensures a fair amount of receipt tokens corresponding to the deposit value and its share in the total pool.

  2. In simpler terms, a user can expect that while initialling one Deposit token will equal one Receipt, as more deposits and more yield are made, a user can expect to receive less than one receipt token.

• Target APY vs True APY

  1. The treasurer defines the Target APY, which should be a projection of sustainable distribution of revenue earned by their protocol, company, etc.

  2. The True APY is the APY calculated by dividing the current reward pool balance by the total supply of receipt tokens issued.

• Withdrawal Request Accounts

  1. When depositors wish to withdraw or redeem rewards at the current True APY, they must deposit their receipt tokens into a unique withdrawal request account.

  2. These tokens will now be locked for the minimum lockup duration. At the end of this tenure, the withdrawal request can be finalised where the receipt tokens are burnt while the principle deposit plus yield are returned to the user.

Deposit Security

User deposits in the Tokenised Revenue Distribution program are completely self-authorised. This means users maintain the only given permission to remove the original principle in which they deposit.

By default, this ensures the utmost security for the principal deposits.

Unlike typical synthetic staking contracts or "internet bonds" in the case of ethena, where deposits and rewards share a single pool - the RTB program seperates principle deposit and yield (rewards) natively. this design decision allows for native principle protection where the rare scenario of not enough yield being present to match the stated value of the reward ratio can occur in single pool design.

Although the program is designed as such, there are common risks, such as program exploitation, that you must be aware of before making such decisions as to deposit.

Treasurer Obligations

The treasurer plays an important role in the social contract between depositors and in the initialization of protocols for these vaults. As the treasurer makes public obligations about the Target APY in which they project revenue to be match such a distribution at the current size of receipt tokens.

This obligation is similar to the announced expected rates vs actual rates of the central banks of the US and other Western nations.

The treasurer is expected to meet the target APY with deposits of the reward token into the reward pool; likely, this should come from a sustainable revenue source with careful consideration for consistency in its distribution. However, it is important to note that the Treasurer can fail to meet the target APY or make any deposits. For this reason, we ensure all principal deposits are completely secure and inaccessible by any party other than its depositor.

Once reward tokens are deposited into the reward pool, the treasurer cannot remove them. Thus, the only way to claim such tokens is to go through the lockup and redemption process of a receipt token.

Users claimed rewards are not based on the treasurer's defined target APY but the true APY at the moment of the withdrawal request.

Redemptions

Redeeming / Withdrawing from the RTB program is permissionless, principle deposits cannot be frozen regardless of true apy status. all withdrawals are subject to their agreed minimum lockup term.

When users deposit initial tokens, they receive receipt tokens. Typically in stake systems like in the case of ethena, this ratio would represent a lower return of receipts over time corresponding to the increase in claimable yield.

In example while a user may initially receive 0.99-1 tokens per deposited token. Over time as the pool earns more yield - this may go lower for example 0.8.

Redeeming RTB receipt tokens requires you to submit a withdrawal request and deposit your receipt tokens into the account. This will lock in the true APY at the date of request—for example, if there were 5% APY worth of rewards, you would be redeemed at this rate. Each withdrawal request is subject to a minimum lockup time determined by the treasurer, once this has elapsed the user can finalise the request burning the receipts in exchange for their principle deposit and the locked in apy return.

The program's design ensures that the valuation of the receipt token is at least 1:1 with the market value of the deposit token. This is due to the secure design of both the principle and reward vaults.

Review the Repository!

reflect-program-library/reflect-tokenised-bonds at main · palindrome-eng/reflect-program-libraryGitHub

RTB Program