kUSD is a spendable dollar. Portfolio risk is sold as dated Bonds, so Liquid holders do not carry it.
Risk in a stablecoin's backing should be bought by an investor who chooses to carry it, rather than passed automatically to every holder of the currency.
Hold the senior claim, or buy a dated Bond. Liquid kUSD never takes the portfolio.
Liquid kUSD is a senior claim on the reserve. It has no portfolio exposure.
Dated Bonds take the portfolio's risk for a stated term.
The reserve stands apart from the portfolio. Liquid kUSD is senior on the reserve. Bonds, then Equity, take the portfolio's risk.
U + A ≡ L + B + E
Priority of payment is fixed in the instrument. It is not a term the issuer can rewrite.
Cash and cash-like instruments, held apart from the portfolio.
The investment portfolio. Bondholders take its risk.
Senior claim on the reserve. No portfolio exposure.
Dated claim on the portfolio. New risk assets are funded only when Bonds are staked.
First-loss capital. Distributions only of surplus above the capital test.
You can hold the senior claim, buy a dated Bond, or provide Equity. Seniority and the waterfall follow from which of those you hold.
Spendable senior claim on the reserve. Bondholders pay a daily carry. No portfolio exposure. In a wind-down you are paid first from the reserve.
You pay a daily hazard to Liquid kUSD and recover twice that as a preferential hurdle on portfolio profit. Staking funds new assets. Equity takes the first loss.
First-loss capital, residual after Bonds. You appoint managers and may veto a posted mark. You may distribute only surplus above the capital test, computed after the period has settled.
Holdings are observed. Marks are the only input taken on trust.
You issue Liquid kUSD against USDC. The reserve is not spent to fund the portfolio.
100 USDC in → 79.74 kUSD out · premium 20.26 to the reserve
No portfolio exposure. Liquid kUSD is a senior claim on the reserve.
Bondholders pay Liquid holders a daily carry.
In a wind-down, Liquid kUSD is paid first from the reserve.
You stake Liquid kUSD into a dated Bond. That leverages the balance sheet: new portfolio assets are funded. You pay a daily hazard rate to Liquid holders, and you recover twice that rate as a preferential hurdle on portfolio profit.
Liquid kUSD, hazard3.40% a yearBonds, hurdle3.40% a year
Staking funds new portfolio assets. The reserve is not spent.
Paid to Liquid kUSD for use of the sheet. Higher portfolio risk raises it. Longer dated Bonds lower it.
Twice the hazard, and Bonds are paid that first from portfolio profit. Liquid holders have no claim on it.
Equity takes the first loss, before Bonds. Forty quarterly maturities, out to ten years. You can sell; you cannot redeem until expiry.
The balance sheet holds the portfolio. A manager may trade it under mandate. They never take title.
Assets remain on the balance sheet, segregated from the reserve.
A manager is appointed to trade, not to hold, and not to write the books.
Holdings are observed. Marks that cannot be observed are posted. That is the only input taken on trust.
Equity takes the first loss. It may distribute only surplus above a capital test computed after the period has settled.
Absorbs loss before Bonds, and ranks last in a wind-down.
Only surplus above the capital test can come out. Later deposits and later marks cannot raise that allowance.
Equity cannot defer a senior payment and withdraw its own capital in the same cycle.
Equity has a short list of controls. Each use is public. None of them change the ranking of claims.
A named authority posts marks. Equity may veto them. Neither writes the portfolio's holdings.
Can move the reserve into admitted cash-like instruments. Cannot spend it on the portfolio.
Can appoint a manager to trade. That is a mandate, not custody.
| Control | Bound by |
|---|---|
| Veto a mark | Blocks a posted mark. Equity cannot withdraw until marks are complete |
| Risk management | Equity can reallocate risk inside its own position. Totals do not change and no asset moves |
| Authorise a sale | Only to meet a rebalance that settlement has already required |
| Withdraw | Only after the cycle closes, and only surplus above the capital test |
| Call liquidation | Only after settlement closes. Cannot be undone |
New portfolio assets are funded only after a Bond is staked. Expansion is bounded by who is willing to carry the risk, not by an issuer decision.
Risk in the portfolio 50% · tender window open, kUSD redeemable for USDC at par
The Bond funds new assets. The reserve is not spent.
Staking consumes Liquid kUSD. Expansion stops when none remains to stake.
Once the Bond book is below half the reserve, Liquid kUSD can be redeemed for USDC at par.
The waterfall is fixed before the event. Switch Profit, Loss or Liquidation to see who is paid, and in what sequence.
Paid first and in full: the hurdle, twice the hazard paid, and any loss already absorbed.
Equity catch-up for losses already absorbed, after Bonds.
Anything above both claims is divided equally.
Equity absorbs first. If that is not enough, Bond principal is written down.
Bonds take what Equity could not cover. Liquid kUSD is not in this queue.
Paid from the reserve, in full.
After Liquid kUSD, Bonds are paid from remaining reserve, then from the sale of the portfolio.
The residual of the sale.
Loss hits Equity first, then Bonds, and the Liquid holder last.
Ninety days of accrual, then one settlement day. Bondholders only commit after the portfolio has been marked and the period has been paid.
Carry accrues. Positions do not settle.
In this sequence
The portfolio is marked
Profit and loss, in rank order
The portfolio is restored to required composition
Bonds stake, or give notice to exit
Equity withdrawal requests are met
All amounts due post in one settlement
The next cycle starts
An instance chooses its reserve assets, admitted instruments, and currency. It cannot change the ranking of claims, or treat marks as holdings.
DAML
Private to the parties
Base Chain (Solidity)
Public ledger
A briefing on kUSD, CapStone, or other Tokenisys products.
Not on demand. The USDC reserve fully backs Liquid kUSD, and only a liquidation pays that out. A partial tender at par (one kUSD for one USDC) can run on its own, but only when the Bond book is below half the reserve.
Yes. Bondholders pay Liquid holders a daily carry for use of their balance sheet. Liquid holders do not share in portfolio profit.
No. You can sell a Bond. You cannot redeem it until it matures.
No. All Bonds rank together. A longer date is a longer term, not a junior claim. In a wind-down they are paid as one class.
Holdings are read from custody, not from the manager. A manager has the authority to invest or trade. Marking is an independent function: it is read from the contract where that is possible, and otherwise posted in public for anyone to verify.
No. Equity can take capital only after the cycle has settled, and only the surplus above the capital test. A later mark cannot raise that amount. Equity cannot skip a payment to seniors and withdraw in the same cycle.
The path is fixed in advance. Equity can call it once settlement has closed, and cannot take it back. Liquid kUSD is paid first from the reserve. The portfolio is then sold. Bonds are paid next, and Equity takes whatever is left.
No. kUSD is in dollars. A separate instance can run in another currency, with its own reserve, assets, Bonds and Equity. They do not share a balance sheet.
Specifications, conformance evidence and whitepapers can be shown under confidentiality.
No. Tokenisys builds the smart contracts under a proprietary licence. The contracts are readable; they are not open source. Commercial licences may be granted.