Price discovery

Each partial trades in its own pool, quoted in the underlying. The pools set the relative prices. Mint and redeem bind their sum to one underlying.

One pool per partial

A set pool holds the partial on one side and the underlying on the other. It is quoted by a crank and routed by Jupiter, Titan and OKX.

There are no partial/USDC pools. A dollar trade goes USDC to underlying on existing venues, then underlying to partial on the set pool, in one transaction.

The peg works like an ETF's authorized participants, without the permission

In an ETF, authorized participants keep the fund's market price near its net asset value by creating shares when the fund trades rich and redeeming them when it trades cheap. Daybreak has the same mechanism, open to anyone. Minting or redeeming moves equal token counts through every pool at once, so the peg is a sum. If the pools price the basket above par, anyone can mint sets and sell every partial. If below par, anyone can buy every partial and redeem. Either loop is profitable when the sum drifts from 1 by more than fees and spreads.

Daybreak runs a reference arbitrage crank that closes both cycles, and anyone else can run one. Because a partial can always be manufactured by minting a set, cornering one partial only hands money to whoever mints against the corner.

The curve inside each pool

Two dynamics act on a partial's price: the underlying moves and every partial reprices proportionally, or the market shifts weight between businesses. A partial the market decides is worthless has to be able to fall to the floor.

The pool curve serves a full [ε, par] price range, a clean peg, an uncrossed book, and tradeable depth at every level. The shipped design is a smooth hybrid:

• Near the seed price, depth is constant in absolute terms. This matches the additive peg: the arbitrage moves every leg by the same number of cents, so every leg should respond equally per token.
• Toward the floor ε (2% of par by default), depth eases into log-percent spacing, so swings in the tail are multiplicative and a cheap partial does not cliff.
• A thin geometric tail runs up to par.

The transition price p* is 0.15 of par. That keeps the peg's leverage across a fat and a thin leg within about 1.5× while still letting a stranded partial reach the floor. A pure log curve gives the peg four times more grip on an 80¢ leg than a 20¢ leg, and a stranded partial stalls around 0.11 instead of falling.

The moving ladder

The chain holds 32 curve points per side, so what a pool quotes is a step ladder sampled from the fixed curve, bunched around the live price.

1. At seed, the deposit fixes one price-versus-inventory line per pool. Nothing the crank does bends it.
2. After trades move the pool along the line, a re-grid re-places the 32 ticks around the new live point.
3. When the price has moved far enough from its label, a re-anchor renames the mid to the live price so the curve's factor space stays near 1. The price at every inventory level is unchanged.
4. Every rung quotes two prices: sellers receive the line at the rung's low edge, buyers pay the line at its high edge. The bid always sits under the line and the ask over it.

The goal of this liquidity design is to keep the market fine-grained wherever the price currently sits, let a partial travel anywhere between the floor and par as the market re-weights it, and make sure that following the price never hands a trader a free round trip against the pool.

Spread recycling

Spread earned by the set pools is cycled back into the pools as depth until a set reaches $500k of pool TVL, after which half of the spread continues to be recycled. This is an operating policy, not an on-chain rule.