Reserve Fund

Solomon maintains a reserve fund in case there is a need to deploy them under certain situations:

• Negative Funding Rates

  • If there is an extended period of negative funding rates that precipitates Solomon needed to pay costs, this will come out of the reserve fund.

• Sustained Depeg Event

  • If USDv experiences a sustained depeg event, Solomon may use the reserve fund to bring it back in line with the peg.

Details

The reserve fund is funded by a percentage of protocol revenues. The percentage can change over time, responsive to the relative sizes of the Solomon protocol AUM and the reserve fund itself. Additionally, funds raised through private placement may be used to bootstrap the reserves initially.

The assets in the fund will initially be only stablecoins.

Reserve Custody

The reserve funds will be held in a 3-of-5 Squads multi-sig.