How the Vault works

Depositors provide capital through two tokens. Borrowers are financed against specific, named collateral. Between them sits a dual record: legally enforceable off-chain, visible on-chain, kept in sync.

01DepositUSDC enters reserve

02MintUSDfr issued 1:1

03StakesUSDfr reflects net book performance

04Exitqueue settles from cash

On-chain state Legal recordkept in step

How net performance reaches sUSDfr

USDfr is backed by reserves and deployed loan principal. Stake USDfr into sUSDfr for exposure to the Vault's net book performance after fees and losses.

The depositor path, end to end.

Minting and redeeming USDfr are KYC-gated. Holding, transferring and staking are open to any wallet that is not sanctions- or jurisdiction-blocked. sUSDfr exits wait out a 21-day minimum hold, then settle first in, first out, paced by the cash the book holds.

01Connect & verifyConnect a wallet. Minting USDfr and redeeming it for USDC are KYC-gated; holding, transferring and staking are open to any wallet that is not sanctions- or jurisdiction-blocked.

02Mint USDfrDeposit USDC, receive USDfr 1:1. Idle reserves are held as USDC and earn nothing until lent.

03Stake to sUSDfrDeposit USDfr into the ERC-4626 vault and receive sUSDfr shares at the current exchange rate.

04Net performance accruesRecognized loan interest affects the exchange rate as it accrues, after protocol fees. Credit losses can lower the per-share rate. Returns are variable.

05Redeem via the queueRequest redemption. Each request waits out a 21-day minimum hold, cannot be cancelled, then fills first in, first out in daily settlements as idle cash allows. Claim the USDfr, then redeem it for USDC.

How loans are made

No blind pool. Every facility is an identified borrower against a perfected claim, with a documented remedy path that executes on default.

The borrower path, end to end.

The loan NFT and the legal wrapper are gated on each other. The NFT cannot mint until every required attestation is on-chain, and escrow cannot release until the NFT exists. A facility cannot be funded on one record alone.

01Apply & underwriteForest Road underwrites each facility in-house. Sectors set LTV, maturity, and concentration limits on-chain; the interest rate and payment terms are signed per facility.

02Legal wrapper executesOff-chain: the receivable is assigned, the UCC-1 lien is filed, escrow is funded. Each fact is recorded on-chain by authorized attesters: named parties who certify off-chain facts to the contracts.

03Synchronized NFT mintEach loan is recorded on-chain as an identified position, the loan NFT. It mints only when every required off-chain attestation and every on-chain condition holds, and escrow cannot release before it exists.

04Funding & servicingCapital deploys against the identified facility. Repayments route automatically through a fixed order of priority written into the contract.

05Repayment or remedyAt maturity the facility repays and closes. In default, the facility freezes and the sector's documented remedy path executes.

What the protocol takes, and when.

Fees apply to what the book has actually earned, as it accrues, never to projections. Every rate below is prospective and capped. Final fees are set in definitive documents and may vary by sector and facility.

Fee stack: sUSDfr

Origination fee2% of funded principal, charged once when a facility is funded. Timelocked governance may change it prospectively, up to a 10% cap.

Share of interest10% of the interest each facility earns; the balance goes to sUSDfr stakers. Timelocked governance may change it prospectively, up to a 20% cap.

Performance fee10% of vault profit above one protocol-wide high-water mark. Timelocked governance may change this prospectively, up to a 20% cap.

Management feeStarts at 0%. May change prospectively up to 2% per 365-day year. Each change locks in fees owed at the old rate first.

How fees are paidVault fees mint shares to the protocol rather than remove backing assets.

High-water markGlobal, not personal to your entry price. Enter during a drawdown and you share fee-free recovery to the old peak. Crystallized fees are not clawed back after a later loss.

Two records, always in step.

Every facility exists in two synchronized records. Off-chain: an SPV holds the position, the security interest is perfected (UCC-1 and assignment), cash moves through escrow and controlled accounts. On-chain: the loan NFT is the position of record, the lender register is reconstructable from events, and the payment waterfall runs automatically. Neither side may advance without the other. The NFT cannot mint until the legal facts are attested, and escrow cannot release until the NFT exists. In default, both act at once.