# Treasury & NAV

The Treasury custodies the fund's reserves, is the sole NET minter of
record, and computes the two numbers everything else keys off: **RFV
(risk-free value)** and **NAV (backing per token)**.

## 1. Reserve policy

**At launch the reserve asset is USDG, and only USDG.** No other asset is
accepted by the Treasury until the RWA mandate's Phase 2 module (§5) is
deployed. Reserves are valued in USDG terms.

## 2. Yield deployment: Morpho

Idle treasury USDG earns yield in **Morpho** (live on Robinhood Chain via
Robinhood Earn), under a hard deployment cap:

* **At most 70% of treasury USDG** (`MORPHO_CAP_BPS = 7000`, default tunable
  before deploy) may be deployed to Morpho at any time.
* The **≥30% liquid remainder** must always cover pending bond payouts plus
  the Buyback Program (inverse bond) capacity. A withdraw path exists so
  those obligations can always be met, even if it means unwinding Morpho.
* The rebalance toward the cap is **formulaic and permissionless** — anyone
  may trigger it; the formula decides. The cap itself has no admin
  override.

## 3. RFV and NAV

```
RFV = liquidUSDG × 1.0
    + morphoPositionUSDG × (1 − 2%)      // MORPHO_HAIRCUT_BPS = 200, default
    + rfvOfPOL

rfvOfPOL = 2·sqrt(x·y) × treasuryLpShare // x = USDG reserves, y = NET reserves

NAV = RFV / totalSupply
```

The POL line is the fund's standing valuation rule, worth stating in words:
**treasury-owned NET is valued at its 1 USDG floor — never at market
price.** The `2·sqrt(x·y)` convention (OHM v1 literal) prices the LP
position as if the NET leg were worth exactly its floor. It is also the
manipulation-resistant choice: `k = x·y` is invariant under third-party
swaps, so no trader can push NAV down by trading against the fund's pool —
swap fees only grow `k`, making the POL contribution to RFV
monotone-increasing, and the valuation is flashloan-resistant by
construction. The same convention is mandatory for LP-bond valuation in the
BondDepository ([Primary Offerings](/mechanism#5-primary-offerings-bond-sales-never-below-nav)).

The 2% Morpho haircut prices smart-contract and liquidity risk on the
deployed position — reserves earning yield are counted as slightly less than
face, on purpose. RFV is the number the emissions hard cap enforces against:
**totalSupply × 1 USDG ≤ RFV, always.** And the invariant suite enforces
**global accretion**: no protocol operation may decrease NAV — bonds,
buybacks, premium sales, fee conversion, Morpho rebalancing, and the
founding offering are all weakly accretive, with exactly two disclosed
premium-diluting exceptions (the epoch dividend mint and pTEAM exercise;
see [The Fund §4](/mechanism#4-the-reserve-cap-the-floor-under-everything)).

NAV rises structurally from four flows, none of which require a premium to
exist:

1. **Morpho yield** on deployed reserves.
2. **Trading-fee inflows** — the treasury share of the 5% fee, 100% of it
   after day 30 ([fee schedule](/FEES.HTM)).
3. **Buyback burns** — buying NET below NAV and burning it shrinks supply
   faster than reserves.
4. **Premium-sale sweeps** — selling NET above 2× NAV brings in more than
   2 USDG of backing per token issued.

## 4. Active market making — both sides formulaic, zero discretion

The fund quotes around NAV from both sides, permissionlessly. Every
precondition is checked on-chain: if the formula says no, the transaction
reverts. There is no parameter-change path except redeployment, and no
discretionary path in either direction.

### The Buyback Program (inverse bonds) — the standing bid

The Buyback Program is a **standing, seller-initiated bid**: any NET holder
may at any time sell NET directly to the InverseBond contract at a
TWAP-settled price of

```
payoutPerNET = NAV × (1 − 1.5%)          // INVERSE_SPREAD_BPS = 150, default
```

* **No trigger, no operator, no waiting**: the bid simply exists. Hitting
  it is rational only when the market trades below NAV − 1.5%, which is
  exactly when a floor bid should be hit.
* All NET received is **burned**. Every fill pays out below backing, so
  every fill is strictly accretive to NAV.
* Capacity per 8-hour epoch: **1% of liquid (non-Morpho) treasury
  reserves** (`INVERSE_EPOCH_CAP_BPS = 100`, default), recomputed fresh
  each epoch — unused capacity does not roll over.
* Settlement inputs are TWAP-consistent snapshots; there are no
  spot-manipulable reads.

The Buyback Program exists **from day one**, not as a crisis retrofit. It
is the market corollary of the 1 USDG floor: below NAV, the fund is the
buyer.

### The PremiumSeller — the ask

When the TWAP exceeds **NAV × 2.0** (`PREMIUM_THRESHOLD = 2.0×`, final),
anyone may call `PremiumSeller.execute()`: it sells a small clip of newly
minted NET into the canonical pool and sweeps the USDG proceeds to the
Treasury.

* The 2.0× threshold is deliberately **above** the K = 1.75 full-emissions
  mark: the treasury only sells after the dividend throttle is already
  maxed — into genuine euphoria, never competing with its own emissions
  curve.
* Clip size: **25 bps of the pool's NET reserves per execution**, with a
  **minimum 1-hour interval between executions** and TWAP-bounded slippage.
  Small, slow, formulaic.
* Every NET sold above 2× NAV brings in more than 2 USDG against a 1 USDG
  floor obligation — strictly accretive, and trivially inside the RFV cap.

## 5. The RWA acquisition mandate (Phase 2)

NetNet is an **RWA accumulation treasury**: the mandate is to diversify
reserves into on-chain real-world assets — **the SPY stock token is the
first candidate** for the Phase 2 whitelist.

> THE FUND CURRENTLY HOLDS NO RWA POSITIONS. EVERYTHING IN THIS SECTION IS
> FORWARD-LOOKING MANDATE LANGUAGE ("THE FUND INTENDS TO…"). HOLDINGS
> TABLES IN THE SHAREHOLDER TERMINAL ARE GENERATED FROM ON-CHAIN STATE
> ONLY, AND WILL SHOW AN RWA POSITION ON THE DAY THE FUND ACTUALLY HOLDS
> ONE, AND NOT ONE DAY BEFORE.

**RWA acquisition is a Phase 2 module.** The launch contracts **cannot**
move treasury funds into RWAs — no acquisition path exists in the deployed
code, and nothing in the launch contracts references RWAs. The acquisition
mechanism, asset whitelist, and liquidity thresholds will be published as a
fully disclosed module before that module is deployed. Until then there are
no thresholds to print, and this page prints none.

## 6. Current holdings

| Asset | Where | Status |
|---|---|---|
| USDG | Treasury (liquid) + Morpho (≤70%, 2% RFV haircut) | live at genesis |
| NET/USDG Uniswap v2 LP | Treasury (protocol-owned liquidity) | live at genesis |
| RWAs | — | **none held**; Phase 2 mandate only |

This table is the disclosure of record until the shareholder terminal's
on-chain-generated holdings view supersedes it.