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Blotter

Token and integrations

$BLOT

First-loss staking, the premium split, buy & burn. Not launched yet.

$BLOT is the token of the Blotter protocol. Its function is narrow: staked $BLOT is first-loss capital for the pool, and stakers are paid a share of the net premium for taking that position. This page describes that role and states plainly what is not disclosed yet.

First-loss staking

The pool takes price risk on the inventory it holds across a market close. When that risk produces a loss, someone has to bear it. In Blotter's design, staked $BLOT bears it first.

A holder stakes $BLOT in the staking contract. While staked, the tokens are exposed to being burned if the pool records a loss. In exchange, stakers receive 20% of every positive net premium.

The reasoning is one of alignment. Stakers are paid out of the same premium as depositors, so they benefit when the pool absorbs more. Placing them in front of depositors means that the party paid for the pool's risk-taking is also the party that pays first when its guardrails prove too loose.

Staking is the riskiest position in the system by construction. A staker can lose the entire stake in an event in which depositors lose nothing.

The loss waterfall

Losses are absorbed in a fixed order.

  1. 1

    Premium already collected

    A fall in the value of carried inventory is first offset by the bonus collected on that inventory. As long as the gap is smaller than the premium, the result is still positive, only smaller.

  2. 2

    Staked $BLOT

    If the gap exceeds the premium, the pool has a net loss. Staked $BLOT is burned to absorb it, up to the full stake.

  3. 3

    Depositors

    Whatever the stake does not cover reduces the pool's total assets, and therefore the share price. All shareholders bear it in proportion.

Where a gain goes, and who absorbs a lossA positive net premium is split 70% to depositors, 20% to $BLOT stakers and 10% to buy and burn. A loss is absorbed first by staked $BLOT. Only once the stake is exhausted does the loss reach depositors.episode ends in a gain70% · depositors, through the share price20% · stakers10% burnepisode ends in a lossloss arrives here1 · Staked $BLOTfirst-loss capital, written off first2 · Depositorsonly once the whole stake is goneThe stake bounds depositors’ exposure. It does not remove it: a gap beyond premium + stake is a depositor loss.
Order of absorption: premium already collected, then staked $BLOT, then depositors.

Example (hypothetical numbers). The pool has collected 50 of premium on inventory that then gaps down by 200. The net loss is 150. If the stake can absorb 100, stakers lose 100 and depositors lose 50. If the gap had been 40, there would be no loss at all, only a net premium of 10 to split.

Limits of the buffer

The buffer is finite. A gap larger than the premium plus the stake reaches depositors. There is no further layer behind the stake: no reserve fund, no backer and no insurer.

The buffer is also denominated in $BLOT, not in USDG. What it absorbs depends on the market value of the staked tokens at the time of the loss, and that value may itself fall in the same stress. The mechanism that converts a burned stake into coverage for the pool is a contract-level detail that is not published yet. Depositors should not read the existence of a stake as a fixed amount of protection.

The premium split

When a batch of inventory has been unwound with a positive result, the net premium is distributed as follows.

ShareRecipientRationale
70%DepositorsThey supply the USDG that repays debt and they carry the residual risk
20%$BLOT stakersThey absorb losses before depositors
10%Buy and burn$BLOT is bought on the market and destroyed

The split applies to the net premium, after slippage and mark-to-market, not to the gross bonus. When the result is negative there is nothing to split, and the waterfall above applies instead. The derivation of the net premium is in Warehouse and unwinding.

Buy and burn

A tenth of each positive net premium is used to buy $BLOT on the open market. The purchased tokens are burned, which removes them from the supply permanently. It operates only when the pool has a positive result, and says nothing about the market price of $BLOT, which can fall regardless.

Supply

The supply of $BLOT is fixed at creation. The token contract has no mint function available to an administrator, so the supply cannot be increased by anyone after deployment. It can only decrease, through the buy and burn and through the burning of stake in a loss.

This will be verifiable in the token's published code once the contract exists. Until then it is a design commitment, not something you can check.

What is not disclosed yet

This documentation deliberately gives none of the following:

  • No price. There is no sale price, no valuation and no price target.
  • No supply figure and no allocation. The total supply and its distribution will be published when they are final.
  • No date. There is no launch date and no schedule.
  • No staking parameters. Unstaking delay and any minimum stake are not set.

These will be published on this site and on @BlotterRH (opens in a new tab), and nowhere else first. Anyone who claims to know them earlier, or offers early access, allocations or a presale, is not acting for Blotter.

What holding $BLOT does not give

$BLOT is not a share of the pool and carries no claim on its USDG or inventory. Unstaked $BLOT receives no part of the premium. Staked $BLOT receives a part only when there is one, and can be burned when there is a loss. Nothing here is a promise of return or a recommendation to acquire the token. See Risks and Legal.