Protocol design

Settlement and maturity

This page covers the rate freeze, who can trigger it, who gets paid first if the money falls short, and what stays open afterwards.

Terminal valuation

The ATS bond, strategy and market share a maturity date. The strategy values the terminal bond position, including attributed coupon receivables. Before freezing that value, the tokenizer calls SY upkeep to synchronize coupon cash.

Freezing the settlement rate

After maturity, freezeMaturityRate() checkssettlementReady() and records the terminal SY exchange rate once. Pending settlement raises SettlementPending. Subsequent redemptions use the frozen value. The first post-maturity operation can freeze it automatically; a keeper observation immediately before maturity is not required.

observeRate() records live rates before maturity for accounting. It does not select the terminal rate used by the current ATS strategy.

Who gets paid first

Settlement enforces a strict order on the escrow: the full PT principal is reserved before any YT interest is paid. In normal operation this ordering is invisible, because the escrow covers both sides in full (see the tokenizer’s coverage rule). It only bites if the underlying pool genuinely loses money:

  • PT holders share any shortfall proportionally. Each redemption is capped at that holder’s fair share of the escrow, so being first in line buys nothing and there is no bank-run dynamic on the senior side.
  • YT holders stand behind PT and are paid from whatever remains above the principal reservation. Within that junior slice, collections during an active shortfall are served in the order they arrive. Splitting that slice proportionally instead is a documented future item; it needs an extra piece of shared bookkeeping the contracts don’t carry today.

What stays open after maturity

  • PT redemption: open indefinitely, always at the frozen rate. There is no deadline to beat and nothing gained or lost by redeeming late.
  • Final YT collections: interest earned up to the freeze remains collectible after maturity, subject to eligibility and available junior surplus. Nothing new accrues.
  • SY withdrawal: unwrapping SY to cash has no maturity attached. It works before, at, and after.
  • LP withdrawal: liquidity providers can exit; the pool’s PT has finished its glide to face value by then.

Long-lived storage

Contract state lives in the EVM contract’s own storage, which is permanent: there is no rent to top up and no expiry timer to beat. Per-holder interest ledgers and LP balances are ordinary contract storage, and they remain readable and usable for as long as the Hedera network keeps the contract state. Funds cannot be lost to an expired storage entry.