Shield Economics
This page documents the full economic model of MAGMA Shield: how payouts split on each resolution outcome, the partnership fee schedule, yield parameters, and minimum coverage thresholds.
TRUE resolution (no exploit)
When the oracle confirms the protocol was not exploited (TRUE):
- SAFE backers receive: principal + full DeFi yield + conviction multiplier.
- EXPLOIT backers forfeit their principal stake (yield already earned is retained).
- The EXPLOIT principal redistributes to SAFE backers pro-rata.
No protocol fee is charged on a SAFE outcome — 100% of the EXPLOIT pool flows to SAFE backers.
FALSE resolution (exploit confirmed)
When the oracle confirms an exploit occurred (FALSE), the SAFE pool is split. The split differs by tier. In both cases, EXPLOIT backers additionally receive their own principal back plus the yield they earned.
Partnership Shield — FALSE resolution
| Recipient | Share | BPS |
|---|---|---|
| Protocol team (self-hedge) | 50% | 5,000 |
| EXPLOIT backers (pro-rata) | 35% | 3,500 |
| MAGMA Core treasury | 12% | 1,200 |
| Seam Protocol (CPI) | 3% | 300 |
Community Shield — FALSE resolution
| Recipient | Share | BPS |
|---|---|---|
| Protocol | 0% | 0 |
| EXPLOIT backers (pro-rata) | 58% | 5,800 |
| MAGMA Core treasury | 39% | 3,900 |
| Seam Protocol (CPI) | 3% | 300 |
The MAGMA Core and Seam shares are paid via cross-program invocation (CPI) at finalization. See Technical Specification for the on-chain constants.
max_self_hedge_bps)The Partnership 50% self-hedge is the uncapped default. Shield v2 adds an admin-settable cap,
max_self_hedge_bps (≤ 5_000): the protocol's take becomes min(5_000, max_self_hedge_bps) of the
SAFE pool, and the freed share is redirected to the winning EXPLOIT backers (Core and Seam are
untouched; the reallocation is lamport-neutral). The default 0 means unset — the legacy full 50%
applies until an admin configures a cap.
Partnership fees
Partnership Shield protocols pay a coverage fee:
- Rate: 0.5% of total coverage volume per 90-day period.
- First period: free — no fee for the inaugural coverage window.
- Timing: collected at the start of each period, not contingent on the resolution outcome.
Yield parameters
| Parameter | Value |
|---|---|
| Approved yield protocols | Kamino, Marinade, Save |
| Yield spread cap | Max 0.5% above the raw DeFi rate |
| Yield accrual | Continuous from commitment date |
| Yield on loss | Retained — never clawed back |
| Backing asset | SOL (native) |
Yield is accounted on-chain in Shield v2 via ERC-4626-style share accounting per side — the
trusted off-chain yield_lamports parameter is removed. A trustless keeper (harvest_yield)
books only real surplus SOL that arrived in a side vault, and claims are capped at each side's
realized yield, so the vault can never pay yield it did not earn. See
Shield — Technical → Yield accounting (v2)
and Yield Routing for the routing mechanics.
Minimum coverage thresholds
| Tier | Minimum |
|---|---|
| Community Shield (featured) | 5 SOL |
| Partnership Shield (badge eligible) | $25,000 USD equivalent |
Tier badges
Protocols earn a tier badge based on cumulative backing volume. For Partnership protocols, each badge tier unlocks additional benefits.
| Badge | Backing volume | Partnership benefits |
|---|---|---|
| Spark | < $100K | Partnership badge |
| Flame | $100K – $500K | Badge + featured placement |
| Magma | $500K – $2M | Badge + featured + co-marketing |
| Volcanic | > $2M | Badge + all above + dedicated support |
Discovery Multiplier
The 2.0× Discovery Multiplier applies to the conviction score component of an early
backer's reward — specifically for backers who commit during the first 20% of the coverage
window. It does not double the principal: direct SOL payout is always proportional to
the raw amount committed. The multiplier is stored on-chain (multiplier_bps = 20000 for
discovery-window backers, 10000 otherwise) and consumed by the backend for conviction
scoring.