Protocol Capitalization

Reserve Buffer (ReserveBuffer)

Receives:

• carry charges (via Fee Accumulator + Ledger)

• liquidation penalties

• peg rail fees

Holds:

• rwaUSD

• reference stablecoins (and possibly other high-quality reserves)

Deficit recording (DeficitRecorder)

If an unwind auction fails to raise enough to cover liability:

• Ledger records explicit deficit:

  • badDebt += deficitAmount

Deficits are not silently socialized. They are first covered by reserves.

Recapitalization (RecapMechanism)

If reserves are insufficient:

• protocol triggers a recap procedure that sells a recap asset for rwaUSD/stables

• proceeds are used to eliminate recorded deficits

The recap asset design (governance token, bond token, or similar) is a separate specification, but the architecture requires:

• permissioned minting only under deficit conditions

• transparent auction/sale mechanism

• timelocked governance control