Supply

szipUSD

szipUSD is a yield-bearing vault, built on top of Moloch v3 and Gnosis Safe Zodiac modules. The transferable share token is szipUSD.

• Moloch v3 (Baal) is a Gnosis Safe Zodiac module with a built-in pro-rata, multi-token equity accounting system, based on NAV.
• The ExitGate is the sole custodian of the DAO’s Loot, and collaborates with the Exit Queue to facilitate exits for users, and to burn their underlying shares. This way szipUSD.totalSupply() always reflects the total distributed share value of the Junior Tranche Vault. Depositors hold freely transferable szipUSD tokens, and can buy or sell these tokens through the CoW limit orderbook.
• The Moloch DAO has no governance shares, and the native ragequit() burning of equity is intermediated through a CRE managed Exit Queue.

Moloch v3, Gnosis Safe Zodiac Modules & Chainlink CRE were chosen for the Junior Tranche Vault because this infrastructure can handle automated onchain strategies, preserve protocol solvency, and protect depositors.

Deposit

USDC deposits are automatically routed into the szipUSD vault, and shares are minted to the depositor’s address. The share entry price is determined by a SzipNavOracle, rounded down in the vault’s favor.

This means that arbitrageurs can track the NAV / Yield ratio to determine optimal periods for deposits, or set distressed bids through the CoW Limit Orderbook to buy out illiquid parties.

szipUSD Yield

szipUSD yield is priced in NAV-per-share.

• $1mm is deposited for a 3-month term earning 20% APY.
• That depositor holds $1.05mm of equity at the end of the quarter.
• As credit lines close out, and that depositor wants to exit, their shares are bought out by the NAV Yield + USDC.

On launch, this yield will be liquidity mining incentives from the Bittensor Subnet.

Due to the vault’s structure, onchain yield strategies are also available to Silos.

szipUSD Duration Risk

szipUSD depositors are paid to protect the zipUSD peg by bearing duration risk.

The DurationFreezeModule means that if USDC is in use by a Line of Credit, there must be an equal amount of Junior equity committed within the szipUSD Vault.

Insolvency risk is reduced, as credit lines are only enabled under the following conditions:

• HELOC originators must pass KYB and credit checks.
• HELOC originators must have an existing relationship with a secondary market fund.
• HELOC originators must sign a repurchase agreement within 90 days.
• The lien must meet the underwriting conditions of the secondary market.
• The lien must be held within an SPV, and its existence notarized via Proof.

Recourse on repurchase agreements, and moving lien inventory to secondary markets is an offchain process — and szipUSD depositors are paid to hold that duration.