How it works

Fees, premium and $PBI

$PBI is backing capital that carries the risk: it earns a service's premium and burns when the service breaks its promise.

Premium, USDG

the operator pays it by the second

Reserve, 10%

prober gas and the backstop

Legs, 90%

split by legSplit, then pro-rata

Where premium goes

All premium is paid in USDG. The reserve receives 10% (protocolPremiumBps, bounded at 25%). The rest goes to the legs by the operator's split and inside each leg pro-rata to assets. The operator earns its junior share of its own premium back.

The $PBI leg

$PBI is backing capital that carries the risk. A holder picks a service whose record it believes in and puts $PBI in that service's $PBI leg. It earns that leg's share of the premium, in USDG, by the second. When the service breaks its promise, the slash on the $PBI leg burns: the operator's junior $PBI first, then the backers' pro-rata. An operator that opens a $PBI leg holds $PBI for its own junior tranche. The legs open once the token address is bound, once, irreversibly.

Creator fees

If the token's Pons creator fees are pointed at BondBook, harvest() pulls them from the fee escrow and they are shared as ETH pro-rata to $PBI backing on bonds that are open, active or breached, time-weighted by when it arrives. ETH that arrives while nothing is backed waits as unallocated.