Convert RWAs & SURGE at a Premium | LeoStrategy RCBF Now Live

The LeoStrategy RCBF is something we have been working on for several weeks. The RCBF started as an open proposal, a call for feedback, open Beta tests and constant iteration.

We had to fully switch our team to work on infra-related developments as we started getting bottlenecked by public RPC Nodes. Now, we've got:

1. Our own infrastructure
2. LEO Team's infrastructure whitelisted as a fallback

With these two in place, Payouts are now all back on track daily for RWAs (and weekly for SURGE & ACE).

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The LeoStrategy RCBF is now LIVE -> https://leostrategy.io/rcbf

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While we continue to build on all fronts of our project, getting these done was a top priority.

This week, we are (as Rafiki 3.0 correctly gathered) rolling out the following:

#1, #2 and #3 are all rolled out. Today's blog post is about #2 & #3. We are so excited to finally roll out the RCBF to production!

Convert RWAs & SURGE at a Premium | LeoStrategy RCBF Now Live

You can now use the RCBF to convert LeoStrategy assets at a premium to their current market value:

1. SURGE
2. TTSLA
3. TGLD
4. TNVDA

Up until now, LeoStrategy assets have existed on a kind of one way street. Users can buy them, earn yield and sell them to the market.

Today, we are unveiling the RCBF live in production. The RCBF will autonomously allow you to close the loop: convert LeoStrategy assets based on a % rate to their normal pegged value.

For example, convert TTSLA, TGLD and TNVDA at 95% of peg value (the goal end state of the RCBF).

Slow Ramp

To create healthy economics, there will be a slow ramp on the pegs. Right now, we are starting with the RWAs (TTSLA, TGLD & TNVDA) at 80% conversion rate to peg value. This will be ramped in increments of 5% on a regular basis. 80% -> 85% -> 90% -> 95%.

It will then remain at 95% of peg value in perpetuity (or unless economics dictate an adjustment). Our goal is to keep it at 95% of peg value always.

SURGE will follow a similar path but start at 60% of peg value -> 65% -> 70%. It will likely remain at 70%. The reason why SURGE has a different conversion value is because it already has a built-in long-term conversion mechanism to LSTR at 50:1 SURGE to LSTR. Allowing users to convert too close to the $1 floor price would create negative economics (the incentives to HODL SURGE for the long-term convertibility wouldn't make economic sense).

SURGE is a convertible bond. RWAs are synthetic RWAs. ACE is a true 1:1 stablecoin. These are different assets with different makeups. Therefore, they require different convertibility.

You'll notice that ACE has a baked-in feature for conversions. It will technically also be a part of the RCBF but ACE has a separate mechanism called "PSM" that allows a 98% conversion rate on both sides (more on that for a separate post or visit the /ace page to learn more).

RCBF is LIVE

You can now go interact with the RCBF. It works much like a normal swap.

1. Go to https://leostrategy.io/rcbf
2. Select the asset to convert (TTSLA, TGLD, TNVDA, SURGE)
3. Enter amount
4. See the conversion value
5. Hit convert
6. Sign with Keychain (or manually send using the correct memo) and done

The on-page conversion process window to the right of the converter will show you the real-time lifecycle of the conversion (they take 30 seconds - 60 seconds to process).

As we continue to ramp this up, we recommend doing small amounts for the @rcbf conversions. Try it when profitable and use small amounts regularly. If you run into an issue, use the help icon in the bottom right.

End Goal

Our end goal with the RCBF is to continue a slow ramp. The RCBF will allow users to arbitrage the LeoStrategy stack of assets. This two-sided trading will lead to more Market Maker profits for LeoStrategy (increased volume = increased profits) which bolsters the strength of our balance sheet strategy of acquiring additional $LEO on a daily basis and permanently staking it.

You'll notice the top of the page shows the RCBF holdings. The RCBF Permanently holds the RWAs it purchases from conversions. It has yield preferences set to LSTR so it earns daily yield from the basket of TTSLA, TGLD, TNVDA and SURGE that it holds. This daily yield is earned as LSTR into the treasury which creates autonomous daily buyback pressure on the LSTR token.

Right now, there have been some small conversions. The estimated annual LSTR buyback is 28.11 LSTR per year. These buybacks happen daily (for RWAs) and weekly (for SURGE).

This creates a flywheel effect: more RWAs get converted = more yield earned by the treasury = more daily buyback pressure on LSTR 🔄

It is important to ramp the RCBF consistently over time. In the early days, volatility is expected. As the RCBF matures, you can imagine $100,000 in the RCBF earning a blended APR of ~12%+ would = 12,000+ LSTR bought back per year (12% of the supply!).

In the long-run, we envision a future where the LeoStrategy asset stack continues to grow both in scope and scale. We envision the RCBF scaling alongside it as conversions occur and create permanent holdings on the RCBF Balance Sheet. This will lead to continuously growing LSTR buyback pressure from the holdings. It is not hard to imagine the RCBF growing to $1M, $10M and beyond.

At $10M in the RCBF earning 10% per year, that would be $1M per year in LSTR Buyback pressure. This makes a lot of assumptions on growth around LeoStrategy and our asset stack and we are confident we will exceed these expectations as we continue to grow our strategy and accumulate additional $LEO in perpetuity.

Questions? Comment below!

https://leostrategy.io/rcbf is now LIVE.

Posted Using INLEO