Reserve Fund
ELUSD maintains a Reserve Fund to prepare for unexpected scenarios such as extreme market volatility or losses on hedge positions.
The Reserve Fund is an internally accrued and managed capital buffer that enhances the protocol’s self-stabilizing capacity.
Accrual
A fixed portion of protocol profits is periodically allocated to the Reserve Fund.
Reserve assets consist primarily of high-quality stablecoins (e.g., USDT, USDC) and are structured to be immediately liquid.
Purpose & Triggers
The fund is used only upon predefined risk events, such as peg-band deviations, hedging losses, or large redemption requests.
This design helps the protocol operate smoothly through short-term shocks.
Replenishment Policy
If the Reserve Fund is tapped, an automatic re-accumulation mechanism operates over a defined period to restore it to the target level.
This supports a durable, long-term stabilization framework.
In short, ELUSD’s Reserve Fund functions as a near-term loss absorber and volatility buffer, strengthening both capital efficiency and system stability.
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