Sukuks and tranches

A Sukuk is how a Member funds trade finance. You pay USDG into one tranche. You receive SUKUK at a discount to the 4-hour average price, held in a position that is locked for the term you choose. While it is locked, your position receives credits from the tranche's realised profit and bears the tranche's losses. When the lock ends, the SUKUK and its credits are released to you over a few weeks.

Your USDG does not come back to you. It is deployed into the tranche's vault, and whatever the vault pays back goes to the reserve. What you hold is SUKUK.

Tranches

A tranche is one real exposure: one deployment of capital into one vault, with its own ID and its own ledger. Tranches fund SukukFi's duPRT vaults on Robinhood Chain. A tranche's capacity is counted once, net of any institutional commitments to the same exposure. When a vault rolls its capital over, the original tranche carries on with its original budgets. Only new capital opens a new tranche.

Opening a tranche is a protected action: it is queued in public for 7 days before it can run. A tranche moves through these states:

• Open. Sukuks can be bought until the tranche reaches its capacity.
• Filled. The capacity is reached. No more Sukuks.
• Deployed. A keeper has deployed the tranche's USDG into its vault. A deployed tranche takes no more Sukuks. If a deployment is cancelled in full, the tranche goes back to open or filled.
• Impaired. A payment was missed. Exits, claims, Syndicate moves and re-allocation in the tranche freeze, and so do seat and Agency sales everywhere. Only the Safe can lift an impairment, and it stays until the Safe does, even if all the principal comes back. See How losses work.
• Closed. Every dollar of the raise is accounted for: paid back by the vault, sent to the reserve undeployed, or written off after a recorded loss. Closed is final.

If a vault takes only part of a tranche, the Safe can send the USDG that was never deployed to the reserve, and the tranche closes once all of it is accounted for. That USDG goes to the reserve, not back to the Members.

Tiers

All five tiers are open whenever a tranche has capacity.

The lock starts when you buy.

Price

The price of a Sukuk is the 4-hour average price of SUKUK, less your tier's discount. There is no markup. If that price would be below backing per token, the purchase is refused.

For illustration only: if the 4-hour average were $0.25, a 12-month Sukuk would price SUKUK at $0.235. 1,000 USDG would buy about 4,255 SUKUK, against 4,000 at the average itself. The extra 255 are the position's bonus, and they matter if you exit early.

When you buy, you choose:

• the tranche;
• the tier;
• the Syndicate, which is required (from a referral link, or chosen from the list);
• the least SUKUK you will accept, so the purchase fails rather than fills at a worse price;
• optionally, one wallet to own the position, if it is not the wallet paying. The paying wallet is recorded either way.

A minimum purchase applies; its size is set before launch. Sukuks open 120 minutes after the pool opens.

The breaker and issuance caps

The 4-hour average used for pricing has a floor: it can rise at once, but it can fall by at most 1% an hour. A breaker compares the 30-minute average with the 4-hour one and refuses Sukuks while they are further apart than a set threshold (set before launch). So after a real fall in price, Sukuks pause until the average catches up: about 6 hours after a 20% fall, about 35 hours after a 40% fall.

Issuance can also be capped per hour and per tranche. Those caps are set before launch. Beyond them, nothing limits how fast a tranche fills. How the averages are measured is in The market.

Release and claiming

Nothing can be claimed during the lock. When the lock ends, your SUKUK and your credits are released in a straight line over the release period, which is fixed when you buy. The release period is 4 weeks, or longer if needed so that the tranche, once full, never releases more than 5% of total supply in a week. It is sized on the tranche's whole capacity, so every Sukuk in a tranche gets about the same period, whether you buy first or last. The rule never limits buying, only how fast SUKUK unlocks after the lock ends.

Only the position's owner can claim. You can claim whatever has been released at any time, except while the tranche is impaired. Positions cannot be transferred.

Credits

When a tranche's vault pays realised profit, the profit first refills any earlier write-down, then pays the Agency's fee. The rest buys SUKUK on the official pool, in small daily orders. What it buys is split by the tranche's principal:

• the part matching principal whose Sukuks are still locked is split in half: half is credited to those Sukuks, half is burned;
• the part matching principal whose locks have ended is all burned.

Credits within a tranche are shared pro rata to USDG principal and to time locked. A Sukuk counts as locked until the day boundary after its lock ends. Credits are held in your position and released with it after the lock.

The half-and-half split is the working figure. The final ratio is set before launch.

Credits depend entirely on realised profit. If a tranche pays no profit, there are no credits. They are paid in SUKUK, whose price moves.

Early exit

You can leave a Sukuk before its release finishes. Exit Immediately pays you the unreleased SUKUK at once, less a penalty. Exits are frozen while the tranche is impaired.

During the lock, the penalty has three parts:

• a fee of 15% times the share of the lock you have not served, and never less than 3.5%;
• a clawback of the bonus, in proportion to the share of the lock not served;
• a cap: you never receive more SUKUK than the same USDG would have bought in the longest tier no longer than the time you have served, or at the plain average if you have served less than 3 months. With the settings above, the cap does not bind. It is there in case the fees are changed.

The same fee rate applies to your credits. The clawback and the cap apply only to the Sukuk's own SUKUK.

After the lock, during the release, the fee is 3.5% of what is still unreleased.

Half of every penalty is burned. The other half goes to a penalty pool that is shared among locked Sukuks across the protocol, in proportion to their tranche's locked principal. Only tranches deployed before the share-out take part.

For illustration only, with the 12-month Sukuk above (4,255 SUKUK, 255 of them bonus), exited after 90 days of 360:

The exit fee settings are protected parameters. They can never exceed 30%, and the minimum can never exceed the maximum.

Insider notice

Wallets on the conflicts register (signers, genesis Agency members and others with a recorded interest) cannot exit at once. If either the paying wallet or the owner is registered, the exit must be requested first. It can run only after the tranche's next payment date has passed and the payment has been confirmed, and it must run within 7 days of that date. Any missed payment since the request cancels it. Ordinary Members exit at once.

Moving to another Syndicate

A Member chooses a Syndicate once. The only time a Sukuk can move is while its seat is under sale notice: the Member may then move it to another Syndicate at no cost. The old seat keeps the raising fee for the months the Sukuk was with it.