Yield-Bearing Narrative Capital Markets

A Yield-Bearing Narrative Capital Market (YBNCM) is a market in which participants commit capital to directional claims about real-world outcomes, and that capital earns yield in DeFi protocols throughout the commitment period. MAGMA is an implementation of a YBNCM. This page gives the formal model and the exact distribution rules.

For why this design exists — the capital-efficiency problem and the receipt-token mechanism that makes it safe — see the Protocol Overview.

Formal definition

A narrative N consists of:

• A claim string describing a real-world outcome.
• A resolution time T at which the oracle evaluates the claim.
• A backing pool — participant wallets, committed amounts, and commitment timestamps.
• A yield function — yield earned on committed capital from deposit to resolution.
• A multiplier function — each participant's combined yield multiplier at resolution.
• An oracle function resolving N to TRUE, FALSE, or REFUND at or after T.

The multiplier function is the composition of the Conviction Score tier multiplier, the Eruption Streak multiplier, and the Discovery Multiplier — all multiplicative.

Distribution rules

Every narrative resolves to exactly one of three outcomes. The rules below are enforced in-contract by magma_backing_vault and the pool programs.

TRUE resolution

A correct participant receives three things:

1. Principal returned in full (100%) — always, unconditionally. Principal is never split.
2. A proportional share of the yield pool, weighted by backing_amount × conviction_multiplier.
3. The distribution split applies to the DeFi yield, not the principal.

On TRUE, the DeFi yield earned by the backing capital during the window is distributed on the 58 / 7 / 5 + platform schedule below. The principal is returned in full and is out of scope of the split — only the yield is divided:

Recipient	Share	BPS
TRUE backers (proportional by backing × multiplier)	58%	5800
Narrative creator — Seam Pool royalty	7%	700
Core Pool — protocol treasury	5%	500
Platform fee	1.5%	150

Volcanic tier pays no platform fee

Wallets in the Volcanic conviction tier (score 900–1000) pay a 0% platform fee. The 1.5% (150 bps) that would have gone to the platform is redistributed to TRUE backers instead. The per-tier platform fee schedule is on Conviction Score.

FALSE resolution

An incorrect participant receives:

• 65% of original principal — returned immediately after resolution, no delay.

An incorrect participant forfeits:

• 35% of original principal (false_forge_bps = 3500) → distributed across three pools (below).
• 100% of DeFi yield earned during the window → folded into the same capture.

On FALSE, the forfeited 35% does not flow entirely to the Forge. It fans out across three pools, and the Seam (creator-royalty) share folds into Echo — there is no separate creator royalty on a FALSE resolution:

Recipient	Share of the 35% capture	BPS
Forge Pool → TRUE backers (by backing × multiplier)	58%	5800
Echo Pool → community draw (absorbs the Seam share on FALSE)	37%	3700
Core Pool → protocol treasury	5%	500

The other 65% of principal returns to the backer. The forfeit is neither burned nor taken wholesale by the protocol — the Forge share flows to the correct participants on that same narrative, while Echo and Core route to the community draw and treasury respectively.

REFUND resolution

A REFUND occurs when the oracle cannot produce a reliable resolution. All participants receive:

• 100% of original principal returned.
• 100% of DeFi yield earned during the window.
• Zero fees, zero penalty.

The narrative creator also gets their publish fee returned in full — both the ~80% backing portion (returned as principal, like any backer) and the ~20% treasury portion. Protocol-failure costs are borne by the protocol, not by participants.

REFUND triggers include:

• Oracle confidence below the minimum threshold.
• M-of-N oracle consensus failure.
• SLA breach — 72 hours without resolution.
• Oracle source failure after the maximum retry count.

See Oracle for how these conditions are detected.

The receipt-token (yield-bearing) mechanism

The yield-bearing property is implemented through DeFi integrations. When MAGMA routes committed capital into a yield protocol, it holds the resulting receipt position on the participant's behalf and uses the receipt's exchange rate for accounting.

Yield routing is by token type, choosing among MAGMA's integrated Solana DeFi venues — currently Kamino, Save, Jito, Marinade, Jupiter, Meteora, Guardian, and P0:

Deposit	Primary	Secondary	Tertiary
SOL	Kamino	Save	Jito (staking) / Marinade
USDC	Kamino	Save	—
Other tokens	Highest-APY integrated protocol available at deposit time

Yield is measured, not estimated

The yield component is computed from the actual exchange rate at deposit time versus redemption time — not from an estimated APY snapshot. Because the receipt-to-underlying rate is monotonically increasing, redemption always returns at least the original principal plus accrued yield. See the capital-efficiency explainer and the DeFi yield routing material for details.

The publish fee

Publishing a narrative carries a publish fee of ~5 SOL (NARRATIVE_PUBLISH_FEE_SOL), enforced in-contract. It is an anti-spam gate — a meaningful cost makes mass-publishing junk narratives uneconomical. Unlike a pure platform fee, most of it is not revenue:

Portion	Share	Destination
Creator's own backing stake	~80%	Locked into the creator's BackingRecord on their own narrative
Treasury	~20%	Protocol treasury

The ~80% folds directly into the creator backing lock below: it becomes the creator's at-risk stake on the outcome, subject to the same TRUE / FALSE / REFUND distribution rules as any other backing. Only the ~20% treasury portion is a true fee.

Protocol narratives (created by MAGMA itself) bypass the publish fee via the is_protocol_narrative flag, enforced in-contract.

Creator backing lock

The ~80% backing portion of the publish fee satisfies the creator's mandatory self-backing: creators must back their own narrative with a minimum USD-equivalent amount in SOL at publication time, enforced in-contract. This backing is locked — the BackingRecord is marked is_locked = true — and cannot be withdrawn before oracle resolution.

This aligns creator incentives: a creator who publishes a narrative they do not believe in still has real capital at risk on the outcome.