Tokenomics

Allocation & Distribution

Emissions

In the early stages of the protocol, the only way to receive SBL will be through commitment to USB. Users earn SBL as a reward for converting other assets (e.g. BTC, ETH, stablecoins) into USB and keeping that value committed for a minimum period of time. For example, a user who converts 100 USD worth of BTC into USB and keeps it committed for at least one full reward period becomes eligible to receive SBL at the end of that period. In this way, SBL emissions are used explicitly to bootstrap the growth, liquidity, and adoption of USB.

Emissions follow a BTC-inspired decay mechanism: as time progresses, the total SBL distributed per period decreases, making new SBL increasingly scarce. Rewards are distributed in discrete time windows (e.g. monthly epochs). Users must keep their committed value in USB for at least one full epoch (e.g. 30 days) to qualify; at the end of each epoch, they receive SBL in proportion to the USD value committed, while the total amount of SBL available for that epoch decays over time according to a predefined schedule. Early epochs have higher emission ceilings, later epochs lower ones, with different bands (e.g. first year, second year, etc.) to be calibrated via stress testing.

Emission Schedule

A generic BTC-inspired decaying emission schedule can be written as:

$$E_m = \frac{E_0}{k^m}$$

• $m$ = Epoch index (e.g. Month number, starting at m=1)
• $E_0$ = base SBL emission allocated to the first epoch
• $E_m$ = Total SBL emission allocated to epoch m
• $k$ = Emission decay factor per band (i.e. halving)
• $H$ = Number of epochs per emission band
• $k^m$ = Band index

User Rewards Per Epoch

If user $i$ has maintained their commitment for at least $T_{min}$ during epoch $m$, their SBL reward is:

$$R_{i,m} = \frac{V_{i,m}}{V_{total,m}} \times E_m$$

• $V_{i,m}$ = Average USD value committed to USB by user $i$ during epoch $m$
• $V_{total,m} = \sum V_{j,m}$ = Total committed USD value across all users in epoch $m$
• $T_{min}$ = Minimum time requirement (e.g. one full epoch)
• $R_{i,m}$ = SBL rewards for user $i$ at the end of epoch $m$

Treasury

The Treasury is the central financial engine of the Stabolut ecosystem. It is responsible for receiving, managing, and allocating all protocol-generated revenue arising from delta-neutral strategies, funding rebates, fee rebates, and other operational yields. Its primary role is to ensure that value flows are distributed efficiently across the system to reinforce stability, reward long-term participants, and maintain the robustness of the USB peg. The Treasury acts as the coordinator of all internal capital movements, guaranteeing that revenue is channelled into the mechanisms that enhance the protocol’s safety, growth, and value accrual.

As part of its mandate, the Treasury directs a portion of protocol revenue toward the Buyback Mechanism, which creates structural demand for SBL and delivers value back to stakers. Another portion is allocated to the dynamic burn mechanism, which helps maintain controlled supply contraction over time. Additionally, the Treasury is responsible for provisioning the Insurance Fund, ensuring that sufficient reserves accumulate to protect USB from systemic risks and to maintain trust in its peg.

Together, these components allow the Treasury to balance three core objectives:

• Strengthening system safety through Insurance Fund growth,
• Driving value accrual for SBL holders through buybacks and controlled burns, and
• Preserving liquidity and operational flexibility for evolving strategy needs.

Dynamic Buyback Percentage Based on Insurance Fund Size

The Buyback Mechanism is a core value-accrual system for SBL. As Stabolut generates real yield through its delta-neutral strategies, a portion of this revenue is allocated to purchasing SBL directly from the open market. To ensure long-term sustainability and proper capital efficiency, the buyback percentage adjusts dynamically based on the size of the Insurance Fund. This links SBL demand to system health while ensuring capital is deployed optimally between rewards, safety, and growth.

The underlying principle is straightforward: the larger the Insurance Fund, the lower the buyback percentage. When the Insurance Fund is small, the protocol applies a higher buyback rate to strengthen incentives for SBL holders and maintain attractive yields during conservative operational phases. As the Insurance Fund grows, the buyback percentage gradually decreases, allowing more revenue to accumulate in reserves and enabling the protocol to safely pursue higher-yield, higher-risk strategies. This creates a balanced feedback loop where SBL yield remains consistent across the protocol’s lifecycle without compromising USB stability.

Buyback Percentage Formula

• $IF$ = Current size of the Insurance Fund (IF)
• $IF_{min}$ = Minimum IF threshold
• $IF_{max}$ = Upper target of IF
• $BB_{min}$ = Minimum buyback percentage
• $BB_{max}$ = Maximum buyback percentage

The buyback percentage $BB(IF)$ scales inversely with the Insurance Fund:

$$BB(IF) = BB_{min} + (BB_{max} - BB_{min}) \times \frac{IF_{max} - IF}{IF_{max} - IF_{min}}$$

Burn Mechanism

Stabolut implements a dynamic burn mechanism designed to maintain a controlled and predictable deflation rate for the SBL token. Instead of relying on a fixed burn percentage, the protocol adjusts the burn rate over time to keep supply contraction within predefined targets. This ensures that SBL’s long-term value accrual is stable, sustainable, and responsive to evolving market and protocol conditions. The burn mechanism uses a rolling N-day window to measure supply changes, allowing decisions to be based on recent system performance rather than rigid assumptions.

1. Feedback-Based Burn Adjustment

This model adjusts the burn percentage by comparing realised deflation over a rolling N-day window with the target deflation trajectory.

Realised Annualised Deflation:

$$d_{real} = 1 - (\frac{S_t}{S_{t-N}})^{\frac{365}{N}}$$

Where:

• $S_t$ = Current SBL total supply
• $S_{t-N}$ = Total supply N days ago
• $N$ = rolling window length

Burn percentage adjustment:

$$B_t = clip(B_{base} + k \times (d_{target} - d_{real}), B_{min}, B_{max})$$

• $B_t$ = Burn percentage for the current period
• $B_{base}$ = Baseline burn percentage
• $k$ = Sensitivity parameter
• $d_{target}$ = Intended deflation target (controlled range)
• $B_{min}, B_{max}$ = Lower and upper bounds of allowable burn %
• $clip$ ensures $B_t$ stays within bounds

2. Path-Tracking Burn Adjustment

This model adjusts the burn percentage based on the deviation between actual supply and an ideal target supply path that reflects controlled long-term deflation.

Target Supply Path:

$$S_{target}(t) = S_0 (1 - d_{target})^{\frac{t}{365}}$$

• $S_0$ = SBL supply at reference time
• $t$ = Days since reference
• $d_{target}$ = Intended long-term deflation rate

Deviation From target:

$$\Delta S_t = S_t - S_{target}(t)$$

Burn Percentage Adjustment

$$B_t = clip(\frac{max(\Delta S_t, 0)}{Q_t}, B_{min}, B_{max})$$

• $Q_t$ = Expected SBL quantity available for burning this period
• $\alpha$ = Correction strength parameter (0-1)
• $B_{min}, B_{max}$ = Lower and upper bounds of allowable burn %

Insurance Fund

The Insurance Fund is the primary safeguard of the USB stablecoin and plays a central role in maintaining overcollateralisation, absorbing risk, and enabling controlled growth of the Stabolut ecosystem. It accumulates a portion of Treasury revenue and gradually builds a buffer designed to protect USB against market dislocations, exchange risk, execution failures, and extreme price volatility. As this buffer strengthens, the system transitions from a purely defensive posture to a more capital-efficient and revenue-generating structure.

In its early stages, the Insurance Fund prioritises safety and liquidity, holding reserves in highly liquid, low-risk assets to ensure the stability and immediate redeemability of USB. As overcollateralisation grows beyond specific thresholds, the Fund progressively unlocks access to increasingly sophisticated and higher-yield strategies. These tiers—such as low-risk cash equivalents, third-party delta-neutral strategies, or controlled growth allocations, enable the protocol to amplify its revenue while maintaining strict risk controls. Exact thresholds and strategy allocations will be determined through simulation-based stress testing.

The Insurance Fund also accumulates a small portion of SBL tokens obtained via buybacks. Holding SBL strengthens alignment between systemic safety and token value accrual. In extreme events, these SBL reserves further support backstop mechanisms while allowing the Fund to participate in the long-term upside of the ecosystem.

Staking

Staking SBL is designed to reward users not only for the quantity of tokens staked but also for their commitment over time. When users stake SBL, they receive vested escrow SBL (veSBL), a non-transferable receipt token that represents both their staked position and the time remaining in their vesting schedule. veSBL increases linearly as staked tokens approach their maximum time multiplier, serving as the unified metric used for reward distribution and governance power.

The rationale behind this system is straightforward: the protocol places higher value on long-term contributors. By combining time and stake size into a single veSBL weight, Stabolut ensures that staking rewards flow disproportionately to users who exhibit deeper alignment with the protocol’s long-term goals. As users maintain their stake, their veSBL balance grows, granting progressively larger reward shares from buybacks and a greater influence over governance decisions.

Staking Formula

$$veSBL = \frac{T}{T_{max}} \times S$$

Where:

• $T$ = Time the user has staked
• $T_{max}$ = Maximum time to reach full multiplier
• $S$ = Number of SBL staked

Liquidity

To ensure healthy trading conditions and seamless convertibility for SBL and USB, Stabolut employs a hybrid liquidity model that combines both decentralised and centralised liquidity sources. A portion of the Treasury and strategic partners will supply liquidity to DEX pools, enabling transparent, on-chain trading and supporting integrations across DeFi. In parallel, Stabolut will collaborate with professional market makers to manage liquidity on centralised exchanges, reduce slippage, stabilise price discovery, and maintain orderly markets during periods of high volatility.

This blended approach allows the protocol to benefit from the openness and composability of DeFi while leveraging the depth, efficiency, and execution quality of CEX liquidity. The exact allocation between DEX and market maker-managed liquidity will evolve over time based on market conditions and stress-tested modelling to ensure robust, capital-efficient trading environments for all users.