The hold, the sleeves and the surplus rule

Where a company’s units sit, and the measurement that decides how long they stay there.

§1 Three places

The hold: the tokens sit in the fund's accounts.
A twin sleeve: a two-token pool between the company and a token that moves with it, where anyone can swap. The fund is the only liquidity, so its fees are the fund’s.
A lend sleeve: the tokens are supplied to Kamino.

A twin is the same company from another issuer (NVDAx ↔ NVDAon), or a structural twin: KO ↔ PEP. Every company in the basket with tokens from both xStocks and Ondo can pair with itself. The twin is the second token’s market, so only the first is held to the liquidity standard, and a sleeve can open from the hold’s tokens on one side. Same-company twins trade on a flat curve at the ratio of the two multipliers; structural twins on a constant-weight curve at their index weights.

§2 The surplus rule

For a twin sleeve holding reserves (x, y) with baseline (x₀, y₀), valued at one price p:

surplus = (x + p·y) − (x₀ + p·y₀)

The sleeve now against simply holding its opening tokens, both valued at the same price: fees earned minus the arithmetic–geometric gap, in one number. For the same company from two issuers p is the peg, the ratio of the two multipliers, since both tokens are units of one company; for a structural twin p is the pool’s own marginal price.

For a two-token constant-weight pool with weights w and 1−w the gap grows as ½·w(1−w)·σ², where σ is the dispersion of the pair’s log price ratio. That is why only low-dispersion pairs are admitted. For a lend sleeve the surplus is the interest the position has accrued, surplus = x − x₀ in the company’s units.

§3 Opening and closing

The allocator opens a sleeve with open_sleeve when the pair passes every bound:

The pair is on the eligible list
Its measured dispersion is under the threshold
The sleeve holds no more than the cap of the company’s units

Reading the program’s configuration…

When a sleeve has had no surplus across the close window, counted from its opening or the last moment its surplus was above zero, anyone may close it; its units return to the hold. The allocator may also close a sleeve at any time. Sleeves hold at most a capped share of a company’s units. A redemption draws from the hold, and when the hold is short of a company the payout unwinds that company’s sleeve first.

Reading the program’s configuration…

§4 Harvest

The keeper, or anyone, signs harvest on a sleeve: its earnings are split, the protocol share to the fee vault, the rest left in the fund for every share.

Reading the program’s configuration…