What is ISA
The platform’s semi-inflationary utility ISA is constrained to 120m units released per utilization rate on the protocol, meaning if there is a sustained protocol activity utilizing 500k ISA for a given week with a growth rate of 2% week over week, ISA emissions would scale at that 2% plus base utilization count. Similarly, if activity decreases for a given week, so does the emission rate to provide the minimum base emission rate for the protocol per its activity rate.
Value Accrual For ISA
1. ISA is used to mint all assets on the protocol and these mints constrained per the available liquid POL so theres never a time where redemptions can not be fulfilled. This, paired with the regulated emission rates gives ISA a dramatic fractured risk profile spread amongst all assets. This converges all liquidity on the platform into a deep pool which not only ties ISA’s value to pure liquidity but also the underlying collective asset performance.
2. Round trip fee cycle of 5%+ based off the potential to profit on the underlying. For lower potential to profit assets, the base mint fee starts at 2.5% with a 2.5% redemption fee. For assets that have a higher potential to profit, the fee structure scales linearly from the lowest potential to profit asset on the ethereal platform. For example, DGM is currently has the lowest potential to profit of the assets that will be available at launch at roughly a 12% expected variance per quarter (meaning it has the capacity to move up or down 12% within a quarter, this can obviously grow or shrink based off of market conditions.)
3. ISA is used to secure 10% of RHO natively with an additional 10% through an asset liquidity pair - thus equating to 10% over-collateralization from the time of mint. RHO is used to satisfy all collateral and margin requirements on the protocol at a 1-2.5 times utilization rate. Which means per short dollar on the protocol 30 cents is going to ISA value accrual. RHO acts as essentially your more traditional finance brokerage account SPAXX variant.
4. Since Rho is used to secure risk, upon liquidations, we also receive a percentage of that liquidation which compounds the a former at a rate proportional to the velocity of liquidations. This means if an asset is shorted at $100 with a liquidation rate at $105, should the underlying hit $106 within 15 days of the initial short position, the velocity of that liquidation is perceived as being higher than that of a liquidation that takes 30 days to achieve. As such, the base liquidation fee of 5% on a 30 day period would scale proportionately to 10%. The base and scaling formula are as follows:
5. Interest payments are also paid in RHO, which means regardless of direction - long/short/neutral - there are reoccurring revenue streams with 130%-175% ISA utilization per dollar on the platform regardless of direction due to over-collateralization and variable margin/collateral requirements.
6. ISA is used to cash settle options - which is huge since our optimized models and allowance of complex strategy implementations provide an avenue to pull 10 times more volume per risked dollar. For example, if our option chain was used to hedge FTX, it would have resulted in over 200m in fees collected.
7. Through our portfolio optimization hub, we have different tiers of complexity. At the higher tiers, we will be charging a percentage of portfolios optimized and held natively within the ecosystem - essentially a SaaS compute fee. This only pertains to accounts over a threshold of average transaction value.