Waterline Protocol Continuous drawdown rebate Rev 5 · Pre-audit

Depth below basis, measured every half hour.

Trading fees fund a vault. It pays holders in proportion to how far under they sit, and how long they stay there.

WATER / USDC sample series · no token deployed
SettlementEvery 30 min
DistributionPushed, no claim
AccountingPer lot
Settlement log0x7a…3f1
CheckpointDepthPaidCumulative
$25,000 at basis · 10× turnover
01

Four things happen to every position.

Accounting is per lot, not per wallet. Each buy opens its own lot with its own basis and its own clock.

01

Basis is recorded

Your basis is the lower of your fill and the 24-hour average, so nobody can mint a fake loss by buying into a thin pool. clamped

02

Accrual starts at once

There is no waiting period. The moment the average sits below your basis, the lot is earning. no delay

03

Weight accumulates

Every second the daily average sits below your basis, the lot earns weight by size and depth. per second

04

Payment, or forfeit

Cleared balances are pushed at the next checkpoint. Selling consumes your deepest lots and destroys their weight. automatic

02

Forty-eight settlements a day, pushed to the wallet.

Accrual is continuous. Every thirty minutes the protocol closes a checkpoint and sends what is owed. Nobody signs a claim.

A payment only goes out when it is worth more than it costs to send, so a wallet is paid at the first checkpoint where its balance clears the greater of one dollar or twenty times the network fee. Below that it keeps accruing. Network cost never exceeds five percent of any payment.

checkpoint = 1800 s
release/ckpt = 0.038% ≈ 12% per week
dust floor = max($1.00, 20 × network fee)
0$1$2$3$4 paid accrued 0:002:004:00

Fig. 1  Settlement stepsPaid balance steps at each checkpoint. Accrual underneath is continuous, and the gap never exceeds one interval.

03

Depth counts, with diminishing returns.

A position down 90% accrues about 3.2 times the rate of one down 10%, not nine times.

The curve is flattened on purpose. Manufacturing a deep drawdown costs more than proportionally, because holding a pool below fair value means funding every arbitrageur who buys the discount. A reward growing more slowly than that cost is one nobody can profitably fake.

weight/sec = size × basis × φ(d)
φ(d) = d / (d + 0.35)
0.25.50.751.0 linear φ(d) 10%50%90%

Fig. 2  Shape functionHalf-saturation at d = 0.35. The rate is capped by construction, so no depth pays unboundedly.

04

Everything the contract reads.

Fee per side 4.00% Split 50% to the rebate vault, 35% to the treasury (operator-controlled), 15% back to liquidity. At 10× turnover the treasury share equals 14% of market capitalisation a year.
ParameterValue
Trade fee, each side4.00%
Fee split, vault / treasury / liquidity50 / 35 / 15
Settlement checkpoint30 min
Distributionpushed
Dust floormax($1, 20× fee)
Reserve release per checkpoint0.038%
Basismin(fill, 24h avg)
Accrual delay after purchasenone
Accrual price window24 h
Shape half-saturation d₀0.35
Per-wallet cap, rolling 7 days2.0%
Lot consumption order on saledeepest first