economics

buyback & burn

every dollar of protocol revenue, from every lode-hooked pool, on every block — flows to the vault, hits the buyback executor on a 24-hour cadence, becomes a cowswap market buy of lode, and gets burned forever to 0x…dead. the flywheel is on-chain, transparent, and never stops as long as a single pool keeps trading.

vault accumulation

the protocol vault accumulates the 20% protocol slice from every pool's splitter, in whatever currencies are captured. over a typical operating week with 25 active pools across weth, usdc, usdt, wbtc, and various long-tail pairs, the vault holds a multi-currency basket.

keeper-driven flush

the keeper service runs flushToBuyback(token) for each accumulated currency, periodically (default: every 24 hours). the vault transfers all available balance of token — bounded by the daily cap — to the buybackExecutor address.

the daily-cap enforcement applies to flush operations: at most one day's cap can be moved per 24-hour window. for a compromised keeper, this bounds the loss to a single day's accumulation, which under the configured caps is at most 1 eth + 5,000 usdc per day.

buyback executor

the buyback executor is an off-chain service that:

  1. receives token transfers from the protocol vault.
  2. for each non-lode balance, constructs a cowswap intent: sell x token → receive lode at market, minimum slippage 2%.
  3. submits the intent to the cowswap order book.
  4. on settlement, receives lode and transfers it to the burn address 0x000000000000000000000000000000000000dead.

cowswap is chosen over direct dex execution for three reasons:

  • cowswap's coincidence-of-wants matching often executes large orders at mid-price without market impact.
  • batched settlement protects against frontrunning of the buyback transaction.
  • cowswap's solver competition ensures execution at the best available price.
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executor ships day 14 — revenue accrues from day one

protocol revenue is captured the second the hook fires; it accumulates in the vault from block one of the ramp. the cowswap executor activates on day 14 and begins clearing the vault to burns at the cadence above. nothing is lost in the interval — every dollar captured before day 14 is in the vault waiting to be converted, denominated in eth and stables that have done nothing but appreciate against the burn target.

burn mathematics

each lode burned permanently reduces circulating supply. the expected burn rate is:

textburn rate (lode/year) = (R * alpha_p) / P_lode

where R is annual protocol revenue (in usd), α_p is the fraction sent to buyback (1.0 during stealth, 0.7 post-tge), and P_lode is the lode price at execution.

from simulations against the roadmap tvl curve, expected cumulative burn over the first three years is approximately 5m lode (5% of supply) — and the rate is monotonically increasing: every new pool, every fee tier, every dollar of incremental tvl pumps the burn higher. combined with stake locking (15m+ lode projected by year 3), ~20% of nominal supply is off-float by year three, against a hard inflation ceiling of 8%/yr that has never been used and requires a governance vote plus 5-day timelock to even propose.

burn-rate adaptive mechanism

in stealth mode (pre-tge), 100% of protocol revenue is sent to buyback. post-tge, 70% continues to buyback (burn) and 30% funds treasury operations, grants, and future audit costs. this is a deliberately aggressive ratio.

peer benchmarks: aerodrome 100%, hyperliquid effective 80%, gmx 70%, curve 50%. lode picks the upper end of credible — 70% to burn — because the entire thesis is supply contraction, and because the treasury is already pre-funded by the 10% allocation. nothing in the design starves the protocol; everything in it concentrates value into the token.