Research / DESIGN / JUL 14, 2026
Someone is first in line when the buffer breaks. It is never you.
UseCert Research, Research Desk
4 MIN READ
Every system that pools risk has a seniority stack, whether it admits it or not. We would rather print ours on the front page: when something breaks, losses are absorbed in a fixed order, and holders are last in that order.
The seniority stack
The order is fixed in the contracts. The per-asset funding buffer absorbs the first loss. The staked insurance buffer absorbs the second. Holder backing is never impaired by either. There is no governance vote that can reorder this, and no emergency mode that can touch holder margin to cover a staking shortfall.
What stakers earn and why
Stakers underwrite the insurance buffer, and underwriting is a job. For it they earn the majority share of mint and redeem fees plus funding-surplus fees. The yield is not magic; it is the price of standing behind holders in line.
Slashing, described honestly
If the funding buffer runs out and the insurance draw threshold is crossed, staked tokens are slashed pro rata to make holders whole. The sizing comes from the published stress parameters, not discretion. Stakers opt into this explicitly, and the expected loss distribution is printed next to the yield.
Holders are senior, always. That is the whole product.
The 80/10/5/5 fee flow
Protocol fees split 80/10/5/5: 80% to stakers as underwriting compensation, 10% to top up the insurance buffer, 5% to keepers who run the peg infrastructure, and 5% to the treasury. Every flow is an on chain transfer you can audit, not an accounting line you have to trust.
The vault report.
Short notes on certificates, funding, and the RWA market every Tuesday.
