Reserve Fund
The Reserve Fund is designed to buffer short-term negative reward periods and mitigate the impact of adverse market conditions. It serves as a risk management mechanism rather than a guarantee against loss.
Capitalization
A defined portion of daily rewards (the reserve rate) is allocated to the Reserve Fund.
The protocol targets a minimum reserve capitalization of 10 basis points (bps) of net assets.
If reserve capitalization falls below the minimum threshold, strategy exposure is reduced or positions are closed in a systematic manner. Strategy deployment resumes only after predefined redeploy criteria are met, ensuring disciplined re-entry following adverse conditions.
Accounting Treatment
Assets held in the Reserve Fund are not included as vault assets for NAV purposes; as a result, reserve balances effectively provide overcollateralization relative to hBTC liabilities.
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