Reserve & Vault
The Protocol-Controlled Reserve
Core Function
The Protocol-Controlled Reserve is an automated system for managing the protocol's reserve assets (primarily ETH), held within the Reserve Vault. Its programmed purpose is to accumulate assets according to predefined rules.
Phased Strategy: Reserve Requirement Curves (RRCs)
The growth of the Reserve is managed by a series of phased policy modules called Reserve Requirement Curves (RRCs). Each RRC defines specific operational targets (KPIs) for the protocol.
The protocol operates under the initial parameters of RRC1. A transition to a successive RRC is only enabled once the KPIs of the current curve are fully satisfied. This structure allows for programmable progression in the system's operational targets.
Reserve Requirement Curves
A Reserve Requirement Curve (RRC) is a model within the protocol's logic that tracks progress toward specific, predefined KPIs. These KPIs represent phases in the system's development.
Only the first model (RRC1) is currently fixed and active. The parameters of subsequent models remain undefined until activated by governance.
RRC1:
KPI 1: Achieve or exceed 10,000 outstanding 3Pacts.
KPI 2: Achieve or exceed a 9% reserve backing, measured in ETH, against the total number of outstanding 3Pacts.
GUILD to ETH Ratio: Set at
3 × 10⁻⁴ ETH per GUILD.Growth Coefficient (C): Set at 0.0003.
How the Reserve Grows: Automated Allocation Logic
The protocol employs automated logic for allocating surplus revenue. This logic is governed by a rule based on the current RRC's target:
Fortify Mode: If Actual Reserves (AR) are below the current Reserve Requirement (RR), a significant portion of surplus revenue is allocated to the Vault.
Thrive Mode: Once Actual Reserves meet or exceed the Requirement (AR >= RR), 100% of the surplus is allocated to PODs.
Calculating the Reserve Requirement (RR)
For RRC1, the Reserve Requirement is calculated as follows:
RR= Reserve Requirement, expressed in ETH.B_T= Total outstanding 3Pacts.P_k= KPI Progress (see below).E_r= RRC1 ETH Ratio.
Calculating KPI Progress (P_k)
Progress along RRC1 KPIs is calculated using:
P_k= KPI Progress.KPI_1= Active RRC 3Pact target (10,000).KPI_2= Active RRC backing target (9%).e= Euler's number (~2.71828).C= RRC1 coefficient (0.0003).B_T= Total outstanding 3Pacts, expressed in GUILD.
Calculating Weight (W)
The Weight (W) is a parameter that expresses the protocol's progress along the current RRC. For RRC1, it is calculated as:
W= Weight, a value from 0 to 1.B_T= Total outstanding 3Pacts.AR= Actual reserves in ETH.KPI_1,KPI_2= As defined above.
The Vault: Phased Implementation & Strategic Purpose
Strategic Purpose:
The Vault is the protocol's strategic, sovereign reserve. Its canonical function is to hold pristine, unencumbered assets as the ultimate intrinsic backing for GUILD. It is not a general treasury for operational expenses or speculative deployment.
Strategic Surplus:
Sovereignty is not static. Upon achieving its primary backing mandate, the Vault's true potential emerges as a strategic allocator of surplus value. This potential is unlocked through a hard-coded governance process, transforming the Vault from a passive reserve into an active, sovereign economic engine.
Future Mechanism: Surplus Deployment Through Governance
The protocol's ultimate sovereign capabilities are unlocked not by decree, but through the satisfaction of its own economic goals, as defined by the active Reserve Requirement Curve (RRC).
Once the Vault in its pristine state satisfies the Key Performance Indicators (KPIs) of its governing RRC, it enters a state of strategic surplus. In this state, ETH held in the Vault in excess of the satisfied RRC's threshold may be strategically segregated for community-approved ventures. This creates a powerful, built-in incentive for the community to define RRCs with attainable, meaningful KPIs. An RRC with an unattainable goal would perpetually direct all value flow toward the Vault, never unlocking this capability for surplus deployment.
The system can therefore exist in a stable, sovereign state with a fully satisfied RRC, using the proven mechanics below to pursue new ambitions:
A defined amount of surplus ETH could be transferred to a Vault Partner to generate yield.
The resulting yield-bearing receipt token would be deposited into a dedicated protocol lending vault.
This vault could then issue GUILD loans to fund approved digital or RWA ventures.
Upon full repayment of the GUILD loan, the process unwinds along the same path: the receipt token is reclaimed, the yield position with the Vault Partner is closed, and the principal ETH plus accrued yield is returned to the pristine Vault.
This creates a self-sustaining, closed-loop cycle of capital allocation that actively strengthens the core, pristine reserve upon completion, rather than diluting its role as GUILD's bedrock.
Summary: The Vault’s journey is from tested primitive (Stage 3) to pristine reserve (Stage 4) to strategic sovereign engine (Stage 5+). Its immutable purpose remains the accumulation of risk-off assets to back GUILD, with interim phases designed to validate the tools needed for its future expansive role.
Vault Partner Reference
Vault partner: Auto.Finance
Auto-pool: autoETH
System Outcome
The RRC framework provides the protocol with a programmable, goal-oriented path for sovereign capital formation. By defining clear economic KPIs for the Vault, it creates a hard-coded milestone: the satisfaction of an RRC's targets unlocks the strategic deployment of surplus assets. This transforms the framework from a simple compliance mechanism into an engine that methodically builds foundational security and then governs the optional, value-accreting use of capital earned beyond it.
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