Price Stability Mechanism

The protocol uses a risk tranching structure to maintain the price stability of AZND. This is achieved through the muBOND junior tranche and the establishment of an Insurance Fund that we intend to fund with protocol fees over time

Loss Absorption via muBOND

• Junior Tranche Buffer: muBOND represents ~15% of total protocol TVL and is the first-loss capital in the system

• Mark-to-Market Protection: if the underlying RWA Asset Pool experiences temporary price declines (e.g., from interest rate movements or credit spread widening), these losses are reflected in the NAV of muBOND, not AZND

• Preserving AZND Value: AZND, as the senior tranche, retains its principal value unless portfolio losses exceed the entire muBOND capital layer

• Example:

  • Portfolio declines by 5% due to market movements

  • Losses are absorbed entirely by muBOND NAV before AZND is impacted

Insurance Fund

• Purpose: acts as an additional capital buffer to cover potential shortfalls that exceed muBOND’s junior capital

  • Built over time using a portion of protocol fees

• Deployment: may be used to offset redemption shortfalls, support liquidity during stress events, or stabilize NAV during extreme volatility