Reserve Fund

Overview

The Reserve Fund is an essential component in maintaining the stability and reliability of PBTC. Its primary functions include:

Providing Capital Support: Offers financial resources during periods of negative yield rates from delta-neutral strategies.
Stabilizing PBTC: Ensures the consistent value and performance of PBTC during adverse market conditions.
Risk Mitigation: Acts as a financial buffer to safeguard against market volatility and yield shortfalls.

The Reserve Fund is comprised of high-quality, liquid assets that are readily available to cover yield shortfalls. The composition includes:

Bitcoin: Serves as the direct backing and liquidity for PBTC.
Stablecoins (e.g., USDC, USDT): Provides stability and liquidity without market volatility risks.
Other Assets: Additional assets as proposed and implemented by governance.

The Reserve Fund is managed with stringent oversight to ensure its integrity and effectiveness:

Custody: Assets are stored in MPC wallets and controlled by the contributors and security councils of Photon Labs (to be announced).
Governance: Responsible for overseeing the Reserve Fund, enforcing high compliance and security practices.

The Reserve Fund is funded by a portion of revenue generated by Photon Labs, subject to governance.

The fund will grow alongside the backing assets of PBTC and can also be funded via private capital allocators.

Funding size will be determined and published post-modeling and stress test analysis conducted by Photon Labs.

Last updated 1 month ago