# What is reUSDe ?

## reUSDe ( Insurance Alpha )

> **TL;DR** reUSDe is the Re Protocol’s performance token: it absorbs first‑loss risk across the reinsurance portfolio in exchange for a share of underwriting profits that historically translate to **16 – 25 % net annual returns**. Price compounds **daily** off a quarterly‑refreshed Target Net Asset Value (tNAV), and redemptions are processed **quarterly** on a pro‑rata basis subject to actuarial release of surplus capital.

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### 1. Purpose & Capital Stack Role

* **Stop‑Gap Capital** : Sits junior to reUSD and senior surplus notes, covering any claim shortfalls before senior layers are touched.
* **Profit Participation** : After claims, underwriting fees, and operational overhead, the remaining surplus is credited to reUSDe holders.
* **Regulatory Friendly** : Deployed via the same §114 Trust structure, reUSDe offers reinsurers contingent capital without diluting shareholder equity.

#### Capital Waterfall

1. **Claims Paid**
2. **Underwriting/Ops Fees** 
3. **reUSD Accrual** (risk‑free / basis yield)
4. **reUSDe Surplus Share** (16 – 25 % target RoR)
5. **Protocol Treasury** (excess, if any)

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### 2. Earnings & Daily Pricing

| **Metric**            | **Data Source**                           | **Update Frequency**                     |
| --------------------- | ----------------------------------------- | ---------------------------------------- |
| **Target NAV (tNAV)** | Quarterly actuarial report & audited P\&L | **Quarterly** via public API / Chainlink |
| **Daily Price**       | Calculated / Updated daily                | **Daily @ 00:00 UTC**                    |

*While the price scales daily for smoother UX, actual surplus realisation occurs when quarterly accounts close.*

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### 3. Deployment & Loss Absorption Mechanics

1. **Mint** — Users deposit admitted assets (or reUSD) into the reUSDe contract.
2. **Off‑Ramp** — Funds are transferred to the ICL and onward to the §114 Trust as stop‑gap surplus capital.
3. **Loss Absorption** — If portfolio losses exceed the senior buffer, trust assets backstop claims, reducing tNAV accordingly.
4. **Profit Crediting** — Profits net of fees flow back, increasing tNAV and thus the token’s daily price path.

*Idle funds pending deployment* stay on‑chain, automatically earning the **Ethena sUSDe** basis‑trade yield until called.

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### 4. Redemption Framework

| **Stage**           | **Window**                                                         | **Fulfilment Basis**                            | **Settlement Timeline**         |
| ------------------- | ------------------------------------------------------------------ | ----------------------------------------------- | ------------------------------- |
| **Request**         | First 72 h of each fiscal quarter                                  | Queue captures amount & wallet                  | Instant confirmation            |
| **Actuarial Gate**  | End‑of‑quarter reserve analysis                                    | Determines **Available Surplus**                | ≤ 10 business days              |
| **Pro‑Rata Payout** | If requests ≤ surplus: 100 % fill. If > surplus: proportional fill | Assets wired from trust → on‑chain → burn & pay | Up to 5 business days post‑gate |
| **Rollover**        | Unfilled balance auto‑rolls to next quarter                        | Retains seniority in queue                      | N/A                             |

> **Note**: No secondary market maker pool is promised. OTC trades are unrestricted but not protocol‑guaranteed.

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### 5. Idle‑Balance Yield (Ethena Path)

Any reUSDe liquidity awaiting deployment accrues the **sUSDe rate** (Ethena’s staked USDe), captured and reflected in tNAV. This ensures holders are compensated even when capital utilisation is temporarily low.

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### 6. Transparency & Risk Controls

* **Chainlink Oracles** — Publish daily price, quarterly tNAV, surplus buffer, and queue utilisation.
* **Independent Actuary** — Validates claim reserves and surplus release schedule.
* **Custodian Reporting** — Trust bank provides daily statements; hashed & posted on‑chain.
* **Audit & Assurance** — Smart‑contract audits and annual SOC‑type reports on off‑chain entities.

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### 7. Comparative Advantages

| reUSDe                                            | Tokenised Cat Bonds                | DeFi Senior‑Tranche Vaults                |
| ------------------------------------------------- | ---------------------------------- | ----------------------------------------- |
| *Principal* often at risk but profit share ≥ 16 % | High coupon but binary loss events | Lower APY, convex loss via protocol hacks |
| Daily compounding price                           | Semi‑annual coupons                | Constant share price, yield streamed      |
| Quarterly liquidity with transparent gate         | 3‑5 yr lockup                      | Variable liquidity, no RL trust           |

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### 8. Risks & Disclaimers

* **Loss Risk** — reUSDe absorbs portfolio deficits first; extreme claim seasons may impair tNAV.
* **Liquidity Risk** — Redemption gated quarterly; distress scenarios may extend settlement.
* **Regulatory** — Not offered to U.S. persons; local securities laws may apply.

This document is informational and not investment advice. Parameters (fees, redemption cadence, Ethena integration) may evolve—always consult the latest docs and on‑chain feeds.

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