The redemption reserve

What the reserve promises in normal operation

The reserve holds one asset and recognizes a different claim token. The intended design uses a reviewed fixed-supply, exact-transfer claim token. A reserve explicitly selects either burnFrom or exact transfer into the reserve followed by self-burning at initialization. There is no mutable burn-mode selector. An initialized reserve requires a nonzero claim-token supply.

Initialization does not prove that token supply can never increase. Token code and privileged controls must be reviewed to establish that property. The local fixture token is not proof that an externally launched SVRN token behaves the same way.

Burn tokens, receive proportional backing

Redemption calculates the holder’s proportional amount from the current reserve balance and current total claim-token supply. It burns the requested claim tokens and transfers the calculated reserve assets in one transaction.

The holder supplies a minimum acceptable receipt. A zero-output redemption reverts. The implementation checks the exact holder-balance reduction, total-supply reduction and reserve-asset transfer. A transfer to a dead address is not equivalent to a verified total-supply burn.

All existing token supply is included in the denominator: freely traded tokens, treasury holdings, liquidity-pool inventory and tokens in vesting arrangements. Backing must not be calculated only against circulating supply.

Assets received = floor(reserve balance × tokens redeemed / total token supply)

A worked example

Imagine a reserve containing 2,000 units of its reserve asset, with 1,000 total claim tokens. Burning 100 claim tokens would return 200 reserve-asset units before any external transaction cost. The remaining reserve would contain 1,800 units and the remaining token supply would be 900.

The proportional backing remains 2 units per token in this simplified example. Redemption has not created new backing. These are illustrative quantities, not the proposed SVRN supply, launch price or reserve funding.

Contributions are not deposits with a receipt

Anyone can contribute reserve assets. A contribution creates no new claim tokens, personal withdrawal entitlement or supplier receipt. It increases backing available to existing claim-token holders.

A contribution can raise backing per token. Burning tokens elsewhere may change the denominator if the real token supply actually falls. Neither event automatically creates trading revenue. Market price can differ from redemption value, and the reserve asset itself can change in value.

Limits of the backing model

This is not an immutable or insured price floor. Both administrators must approve recovery activation and each transfer of reserve assets under the current control policy. Upgrades can change behavior. Token restrictions, reserve-asset behavior or a failed burn can prevent normal redemption.

The reserve attempts bounded balance and supply snapshots when recovery begins. Unreadable observations are marked unavailable, not treated as a measured zero. That record preserves historical accounting; it does not automatically compensate holders or guarantee a payout. A future incident-recovery policy must explain how claims would be reconciled.