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Token and fee incentives

OTF token and fee incentives

Status: pre-mainnet policy specification. The contracts are unaudited and this document is not an approval of token distribution, investment economics, or deployment.

OTF token

OTFToken is an 18-decimal ERC-20 named Onchain Traded Funds with symbol OTF. It mints exactly 1,000,000,000 tokens once to its constructor-supplied initial holder. There is no privileged minter, inflation switch, transfer tax, blacklist, or upgrade hook. Distribution, vesting, governance, liquidity, and treasury custody remain deployment decisions.

Annual creator expense ratio

Each vault stores the exact ABI field annualCreatorExpenseRatioBps as an immutable 0..1000 bps annual creator expense ratio. Its beneficiary is fixed at formation. The expense is paid by minting shares, not by transferring basket assets. Fees are lazy and cadence-independent: the fee epoch, fixed-point growth, and fractional remainders ensure that checkpoint timing does not materially change dilution. Every supply-changing operation checkpoints fees before supply math, and final shutdown stops accrual.

If S is pre-fee supply and r is the annual ratio, the one-year target is:

feeShares = S * r / (1 - r)

At 10% for a 365-day year, this is approximately 11.111% of pre-fee supply, leaving existing holders with 90% of post-fee supply. This is a share-dilution policy, not a promise of asset value or performance.

FeeCollector

The factory’s base protocol fee split is minted as shares of the relevant OTF to FeeCollector. The collector does not hold underlying assets for investors. Only its treasury may call claim or claimAll; treasury changes use a two-step handoff. The treasury may redeem claimed OTF shares and execute any subsequent token purchase through its own reviewed multisig process.

Formation-allocation rebate

The optional rebate only reallocates protocol fee shares to the creator. It never lowers the total creator-selected fee paid by holders and does not use a runtime NAV or price oracle. Define:

  • G: signed formation OTF allocation in basis points;
  • coverage: min(floor(actualOtf * 10,000 / accountedOtf), 10,000);
  • W: floor(G * coverage / 10,000);
  • T: configured full-rebate threshold in basis points; and
  • P: normal/base protocol fee share in basis points.
effective protocol share = P                      when disabled or T == 0
effective protocol share = 0                      when valid W >= T and T > 0
effective protocol share = ceil(P * (T - W) / T)  when valid W < T and T > 0

Coverage is based on the signed formation allocation and actual/accounted OTF token balance. The coverage and W steps floor; the final ceiling prevents integer rounding from over-rebating. A donation above accountedOtf is capped out and cannot manufacture coverage. If OTF is absent or duplicated, the accounted balance is zero, a balance read fails, any constituent is under-backed, or policy data is malformed, the normal P split applies (fail closed). Formation allocation does not follow post-formation value drift.

Trust and unresolved decisions

The formation authority/data provider is unresolved and must be independently controlled before production. The creator’s beneficiary and expense ratio are visible at formation but are not a guarantee of performance. Factory/collector governance, token distribution, treasury policy, mainnet OTF addresses, typed quote service, liquidity policy, and the creator-dependent sound-vault emergency path are unresolved. Canonical mainnet USDG identity is configured separately from testnet deployment state.

Pool fees belong to external LPs. The creator promises no pool liquidity, price, execution quality, or buyback. The app’s external-liquidity handoff must disclose that it does not custody LP positions or submit pool-management transactions. Synthra publishes no documented OTF/USDG pair-prefill URL and is not production evidence.

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