> For the complete documentation index, see [llms.txt](https://abrafi.gitbook.io/abrafi-docs/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://abrafi.gitbook.io/abrafi-docs/overview/reserve-fund.md). # Reserve Fund The Reserve Fund serves as a terminal safeguard to absorb periods of negative aggregate yield. It is capitalized by a governance-defined portion of protocol revenue. The fund comprises stable, uncorrelated backing assets (e.g., USDC, USDT, SOL) and may act as an open-market arbitrage vehicle. If the price of USDaf deviates significantly from its provable asset backing, the Reserve Fund is empowered to execute market operations to restore peg integrity. ## Additional Margin of Safety The reserve fund acts as an additional margin of safety behind USDaf to provide a source of capital to pay for periods of possible negative yield. ## Composition of Reserve Fund Stable, uncorrelated backing assets to cover funding payments in the same currency denomination: * Stablecoin assets including USDC and USDT for USD-M contracts; * Smaller SOL backing asset allocation for SOL-M contracts; and * Other assets as determined by governance. ## Security of Reserve Funds Controlled by an MPC wallet using Fireblocks. Multiple approval workflows are managed by AbraFi Labs. ## Asset Open Market Arbitrage Vehicle Since the solvency of protocol assets is both transparent and provable at all times, if the open market price of an asset diverges sufficiently from its provable asset value backing in an extreme case, the reserve fund may act as a bidder of that asset in the open market. ## Capitalization of Reserve Fund The reserve fund is funded with a portion of the revenue generated by the protocol, allowing it to grow alongside the backing of USDaf. The amount of protocol revenue applied towards the reserve fund is subject to governance. --- # Agent Instructions This documentation is published with GitBook. GitBook is the documentation platform designed so that both humans and AI agents can read, navigate, and reason over technical content effectively. Learn more at gitbook.com. ## Querying This Documentation If you need additional information that is not directly available in this page, you can query the documentation dynamically by asking a question. Perform an HTTP GET request on the current page URL with the `ask` query parameter, and the optional `goal` query parameter: ``` GET https://abrafi.gitbook.io/abrafi-docs/overview/reserve-fund.md?ask=&goal= ``` `ask` is the immediate question: it should be specific, self-contained, and written in natural language. `goal` is optional and describes the broader end goal you are ultimately trying to accomplish on behalf of the user. GitBook uses it to tailor the answer towards what is most useful for that goal. The response will contain a direct answer to the question and relevant excerpts and sources from the documentation. Use this mechanism when the answer is not explicitly present in the current page, you need clarification or additional context, or you want to retrieve related documentation sections.