Adolescent 3Pacts

Also referred to as an Adolescent PACT or PACTs.

⚙️ Protocol Mechanics Disclaimer

Mechanics & Parameters

To best understand the details provided below, please ensure you have read the overview of 3Pacts.

Overview

An Adolescent 3Pact (Adolescent PACT) is the initial state of a position acquired directly for a stable-coin. Its programmed behaviours are defined by a return mechanism, a conversion path, and its role within the protocol's coordination systems.

The Return Mechanism

The primary programmed feature of an Adolescent 3Pact is its association with a stable-coin return, which is distributed to the holder over 12 months from the acquisition date.

• System Function: This mechanism adjusts the effective cost basis for a participant acquiring this position.

• Calculation: The return rate is determined by a protocol function that considers the number of 3Pacts already associated with the acquiring address.

• Claiming: Returns accrue linearly and can be claimed by the holder via a transaction.

The Conversion Process

After the 12-month period concludes, an Adolescent 3Pact must be converted into an Aged 3Pact to interact with the next set of protocol modules.

• Mechanism: Conversion is a permissionless transaction that retires the Adolescent 3Pact NFT and mints an Aged 3Pact NFT.

• Protocol Trigger: This conversion initiates the protocol's logic to allocate the linked 10,000 GUILD units to the appropriate module and makes the holder eligible for potential ETH distributions.

Coordination Systems (Stage 4)

Adolescent 3Pacts are designed to be transferable, facilitating coordination among participants.

• Primary Coordinators: Addresses holding a threshold number of 3Pacts qualify for a parameter in the return rate calculation on future direct acquisitions. This status also enables them to list 3Pacts within official protocol coordination interfaces.

• The Coordination Model: A Primary Coordinator can acquire 3Pacts with a parameterised return rate and offer them to other participants at a different rate via a coordination interface.

• System Outcome: This structure is intended to create a liquid coordination layer for these positions.

Rate Parameters

• Return Range: Up to 33% of the acquisition cost, distributed over 12 months.

• Rate Variables: The applicable return rate depends on several system parameters:

  1. The active Reserve Requirement Curve (RRC) model.

  2. The applied KPI weight, signifying progress within the active RRC.

  3. The number of 3Pacts held by the acquiring address at the time of acquisition.

Acquisition Breakdown

The acquisition of an Adolescent 3Pact involves three assets, each processed by specific protocol logic:

crvUSD:

• A 1% fee is applied. This fee (in crvUSD) is exchanged for GUILD via the Settlement module. The GUILD is allocated to The Grove's holdings.

• A return amount is calculated and reserved to fulfil the promised return mechanism.

• The remaining balance is passed to the Arb. Master Node for allocation to active modules based on their VW3 weight.

GUILD:

• 10,000 GUILD units are minted and allocated to a designated protocol module. Upon conversion of an Aged 3Pact, GUILD units are sourced from this module according to its vesting schedule.

Adolescent 3Pact NFT:

• Minted and issued to the acquiring address.

• The return mechanism begins accruing.

• A future 3Fi token allocation is assigned, to be minted upon conversion to an Aged 3Pact.

• The NFT may be used in other compatible protocol interfaces.

Return Calculation

The return amount is defined by the following formula:

$$Return = W \times Y_a + (1-W) \times Y_b$$

Where Ya and Yb are each expressed as:

$$Y = R_{max} \times \frac{1 - e^{-C \times B_w}}{1 - e^{-T_B \times C}}$$

Variable Definitions:

• Return = The amount to be returned, expressed as a percentage.

• W = KPI-Weight at execution.

• e = Euler's number (~2.71828).

• C = Efficiency coefficient (Ca for Ya, Cb for Yb).

• B_w = Number of 3Pacts held by the acquiring address.

• R_max = The maximum return parameter in the static model.

• T_B = The target number of 3Pacts held to obtain the maximum return parameter.

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