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Blotter

Protocol

Pool shares (ERC-4626)

Share price, NAV, transferability, the free USDG reserve and the withdrawal queue.

A deposit in the Blotter Pool is represented by a share that follows the ERC-4626 tokenized vault standard. This page explains how shares are minted and priced, what backs them, how withdrawals work, and what a holder is exposed to.

Minting shares

A depositor calls deposit with an amount of USDG, or mint with a number of shares. The pool takes the USDG and issues shares at the current share price. convertToShares and convertToAssets return the conversion in each direction at any time.

Shares are ERC-20 tokens. They can be transferred, held by a contract, or used elsewhere on-chain. Whoever holds the share holds the claim on the pool. A transfer moves the full exposure, including the risks below, to the recipient.

Share price

share price = totalAssets ÷ totalSupplytotalAssets = free USDG + Σ (tokens in warehouse × oracle price)
ERC-4626 share price

totalAssets has two components:

  • Free USDG. Deposits not spent on liquidations, plus proceeds of unwind tranches. This includes the withdrawal reserve.
  • The warehouse at oracle value. Every seized Stock Token, multiplied by its current oracle price.

The share price therefore moves for three reasons. It rises when the pool seizes collateral, because tokens bought at the oracle price less the bonus are booked at the oracle price. It falls by the slippage paid on each tranche. And it moves up or down with the oracle price of everything in the warehouse. See Warehouse and unwinding.

Example (hypothetical numbers). The pool holds 600 free USDG and 4 Stock Tokens at an oracle price of 100, against 1,000 shares. Total assets are 1,000 and the share price is 1.00. The oracle price moves to 90. Total assets are 960 and the share price is 0.96. Nothing was sold. The loss is a mark, and it becomes final or reverses depending on the prices at which the tokens are eventually sold.

What a pool share is a claim onTotal assets are free USDG plus the warehouse at oracle value. Share price is total assets divided by total share supply. Withdrawals are served from the free USDG reserve first, then through a queue paid as inventory is sold.totalAssetsReservealways freeDeployableUSDGWarehouseat oracle valueshare pricetotalAssetstotalSupplywithdrawalsRequestredeem shares1 · from the reservePaid at once2 · queue, paid as tranches are sold
What backs a share: free USDG, including the withdrawal reserve, and the warehouse valued at the oracle price.

The share price during a freeze

While the feed is frozen, overnight or over a weekend, the warehouse valuation is frozen too. The share price reflects the last close, not the next open. A holder who exits during a freeze exits at the old marks. A holder who stays takes the gap on a larger proportion of the inventory. The reserve and the queue bound how much USDG can leave at frozen marks. They do not eliminate the effect.

Withdrawals

A holder calls withdraw for an amount of USDG, or redeem for a number of shares. What happens depends on how much free USDG the pool holds.

The free share

A set share of the pool's assets always stays in free USDG. Liquidations cannot spend it. It lets ordinary withdrawals complete immediately, whatever the state of the warehouse. maxWithdraw reports how much USDG an address can take out immediately. In calm periods the warehouse is small or empty, and most of the pool is free USDG.

The queue

When withdrawal requests exceed the free USDG, the excess enters a queue. The queue is filled as unwind tranches bring USDG back into the pool.

The queue exists because the alternative is worse. Inventory becomes USDG only by selling it, and the unwinding rules forbid selling outside market hours, above the tranche cap, during a halt or on a stale feed. If withdrawals could force sales, a rush to exit would turn the pool into a forced seller, and the holders who stayed would pay the slippage for those who left. The queue makes every holder wait for the same orderly unwind.

The exact queue mechanics, including ordering and whether queued shares are redeemed at the price of the request or of the fill, are contract-level details that are not published yet. Until they are, assume that a queued position stays exposed to the warehouse until it is paid.

What a depositor is exposed to

  • Price risk on the warehouse. The main one. Inventory held across a close can gap. If the gap costs more than the premium already collected, the pool has a loss. The loss burns staked $BLOT first. Whatever the stake does not cover reduces the share price.
  • Slippage on unwinding. Thin AMMs make the exit expensive, even in tranches.
  • Idle capital. Without liquidations, the pool collects no premium. There is no base rate, and the share price can stay flat for long periods.
  • Withdrawal delay. Described above.
  • Issuer, oracle and smart contract risk. The pool holds tokens that an issuer controls, priced by a feed it does not control, inside contracts that can have bugs. No audit has been published, and an audit would not remove these risks.

In exchange, depositors receive 70% of the net premium, when there is one. The rest goes to $BLOT stakers, who stand in front of depositors for losses, and to buy and burn. See $BLOT.

The share is not a stablecoin, a deposit account or an insurance policy. Its price can fall below the price at which it was minted. See Risks, and the simulator for different gaps with fictional funds.

No pool contract is deployed today. Any contract claiming to be the Blotter Pool is not. Addresses will be published only on this site and on @BlotterRH (opens in a new tab).