Reserve & Vault

The Protocol's Strategic Backing

Core Function

The Protocol-Controlled Reserve is the sovereign wealth fund of the 3 ecosystem, held within the Reserve Vault. Its purpose is to accumulate unencumbered value (primarily ETH), to provide the intrinsic, organic backing for the GUILD currency. While the Settlement Pledge provides a trust bridge, the Reserve is the destination: the foundation of long-term monetary sovereignty.

The Phased Strategy: Upgradeable Reserve Requirement Curves (RRCs)

The Reserve's growth is not managed by a single, static rule, but by a phased and upgradeable strategy defined by successive Reserve Requirement Curves (RRCs). Each RRC is a distinct policy module with its own KPIs and targets (e.g., a specific target of ETH backing per GUILD), representing a new stage in the protocol's journey toward robust backing.

  • The protocol begins its life under the conservative targets of RRC1.

  • Transition to the more ambitious RRC2 is only enabled once the KPIs and reserve targets of RRC1 are fully satisfied.

  • This progression continues, with each curve building upon the security and ambition of the last.

This structure provides a crucial monetary policy flexibility. As the protocol matures and the broader economic landscape evolves, the parameters of future RRCs (or entirely new curves), can be developed and adopted through governance. This ensures the protocol's backing strategy can remain dynamic and responsive, allowing it to mature in an optimised way without requiring a fundamental overhaul of its core systems.

Reserve Requirement Curves

RRC Models.

A 'Reserve Requirement Curve' is a model designed to assist 3 in understanding its progress along its own adoption curve.

The RRC does not define the rate of adoption, only progress along a curve towards specific KPI's defined by 3 as inflection points; where it expects the adoption phase to change.

While 3 RRC models currently exist, only the first is fixed, the other two remaining malleable with respect to their limits until activated by governance.

Reminder: Governance will not have the ability to activate the next RRC in sequence until all of the predecessor's KPI's have been satisfied.

RRC1.

The first model to be applied has the following two KPI's that must be satisfied before transition to the next RRC becomes possible.

KPI's for RRC1.

  1. Meet or exceed 10,000 outstanding 3Bonds. ( KPI1KPI_1 )

  2. Achieve or exceed a 9% reserve backing, measured in ETH, against the total number of outstanding 3Bonds. ( KPI2KPI_2 )

The GUILD to ETH ratio for RRC1 is set at:

3×10−43 \times 10^{-4} = 0.00030.0003 ETH per GUILD.

CC is a growth coefficient for RRC1 is set at 0.0003.

How the Reserve Grows: The Allocation Policy

Within each active RRC phase, the protocol employs a disciplined, automated investment strategy. All surplus revenue that enters the Distribution Engine is subject to a simple, powerful rule based on the current curve's target:

  • If the Actual Reserves (AR) are below the current Reserve (Recommended) Requirement (RR), a significant portion of surplus revenue is redirected to the Vault to fortify the foundation (Fortify Mode).

  • Once the Actual Reserves meet or exceed the Requirement (AR >= RR) for the active curve, 100% of the surplus is free to be distributed to PODs to fuel ecosystem growth (Thrive Mode), until the next RRC phase is triggered.

This ensures the protocol always prioritises its financial security for its current stage before maximising distributions.

Calculating RR

Using RRC1 defined KPIs, the applied RR is calculated as follows:

RR=(BT×10,0000)×(Pk100)×ErRR = (B_T \times 10,0000) \times (\frac{P_{k}}{100}) \times E_{r}

Where:

RR = Reserve Requirement, expressed in ETH,

BTB_T = Total outstanding 3Bonds,

PkP_k = KPI Progress as defined by RRC1 KPI's.

ErE_r = RRC1 applied ETH Ratio.

Calculating Pk

Progress along RRC1 KPIs are calculated using the formula below:

Pk=KPI2×1−eC×BT1−eKPI1×CP_k = KPI_2 \times \frac{1 - e^{C \times B_T}}{1 - e^{KPI_1 \times C}}

Where:

PkP_k = KPI Progress as defined by RRC1 KPI's.

KPI1KPI_1 = Active RRC 3Bond target.

KPI2KPI_2 = Active RRC backing target, expressed in ETH.

e = Eulers number = 2.71828182845905

CC = RRC1 defined coefficient = 0.0003

BTB_T = Total number of outstanding 3Bonds, expressed in GUILD.

Calculating W

W, referencing 'Weight', which is applied to both Arb.Fee and Rebate calculations, is an expression of 3's progress along the current, applied Reserve Requirement Curve (RRC).

Each RRC may have different KPI's and KPI variables. For RRC1: the active RRC currently in use, with only two KPIs, the weight is calculated as follows:

W=(BTKPI1+ARKPI2)/2W = (\frac{B_T}{KPI_1}+\frac{AR}{KPI_2})/2

Where:

WW = Weight as it applies to RRC1, expressed as a fraction with values ranging from 0 to 1.

BTB_T = Total number of outstanding 3Bonds, expressed in GUILD.

ARAR = The actual reserves, expressed in ETH.

KPI1KPI_1 = RRC 3Bond target.

KPI2KPI_2 = Active RRC backing target, expressed in ETH.

This formula assumes a 3Bond ceiling at the KPI target. This will be enforced while planned tests are undertaken. Thereafter, a new 'Weight' formula will be adopted to better express variables with no ceiling.

Note. Having no ceiling does not mean one will not be in place, only that the formula used to express the weight will assume there is none.

The Vault: A Productive Strategic Asset

The ETH in the Reserve Vault is not held idly. It is productively deployed to generate yield and create future strategic optionality.

  • Yield Generation: Reserve ETH is deposited into an external yield strategy: the Auto.finance autoETH pool. The protocol receives a yield-bearing receipt token (autoETH), and the underlying ETH is automatically compounded to grow the reserve's base value.

  • Strategic Collateral (Post-Stage 5 Vision): These yield-bearing receipts represent a powerful future primitive. They can be used as collateral to ring-fence a portion of the reserve, enabling the protocol to mint GUILD loans for strategic initiatives. This could fund Open POD ventures, Real-World Asset acquisitions, or other expansionary endeavours, turning the reserve into a source of productive capital for the entire ecosystem.

The Vault.

For reference, here are details to our vault partner.

Vault partner: Auto.Finance

Auto-pool: autoETH

Auto-pool smart contract list.

Auto-pool smart contract on etherscan.

Auto-pool audits.

Strategic Outcome: A Structured Path to Confidence and Sovereignty

The RRC framework provides a structured path from a fragile startup to a resilient financial system. It is not designed to achieve a mathematical impossibility like "full backing," but to systematically build a strategic reserve of undeniable scale.

By progressing through defined phases of increasing financial strength, the protocol methodically builds a deep pool of intrinsic value. This growth progressively reduces the system's reliance on the external Settlement Pledge and transforms the nature of GUILD's stability. The guarantee shifts from a algorithmic promise (the Pledge) to a market-driven confidence in the protocol's substantial and growing asset base.

The final RRC represents a "visible horizon", a robust backing ratio that may never be fully reached in a state of infinite growth, but which serves as a permanent north star. This ensures the protocol forever prioritising the accumulation of real value, securing its role as a self-sovereign monetary system built on confidence, not just code.

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