Asset Reserve Fund (ARF)

The Asset Reserve Fund (ARF) is Lendr’s capital buffer—standing ready to absorb unexpected shocks such as custodian failure, hedge slippage, or oracle malfunction..


1 Target Size

  • 3 % of total protocol TVL (aggregated across all chains).

  • Held in highly liquid USDL / USDC so it can be deployed instantly.


2 How the ARF Is Funded

Source
Share
Flow

Performance fees

10 % of every vault’s positive P&L

Auto‑routed by the FeeRouter until the 3 % cap is reached.

Emergency LNDR swap

Governance‑approved only

If ARF falls below 1 % TVL after a payout, xLNDR holders can authorize a temporary LNDR‑to‑USDL auction to recapitalize.

When the ARF ≥ 3 % TVL, its 10 % fee share is re‑routed to xLNDR stakers; it re‑activates automatically if the balance dips below target.


3 When the ARF Can Be Used

Scenario
Trigger
Disbursement Process

Custodian default

Verified asset shortfall after audit

Multisig releases funds to the affected vault.

Hedge loss > draw‑down limit

Vault draw‑down exceeds its maxDrawdown and governance vote passes

ARF tops up the vault to restore NAV.

Smart‑contract exploit

Confirmed exploit & independent audit

Emergency payout after a 48 h timelock.

A super‑majority Snapshot vote (≥ 66 % LNDR quorum) is required for any ARF withdrawal.


4 Transparency & Oversight

  • On‑chain addresses0xArf… (per chain) visible in real time.

  • Monthly report — balance, inflows, outflows and scenario stress‑tests.

  • Auditability — ARF contract included in every external security audit.


5 Replenishment & Growth

If a payout reduces the ARF below its 3 % TVL target:

  1. The 10 % performance‑fee share automatically resumes flowing to the ARF.

  2. Governance may temporarily direct all fees to the ARF until the target is restored.

  3. As a last resort, xLNDR can approve an LNDR‑for‑USDL sale to recapitalize the fund.

Goal: protect user balances first, with minimal dilution to fee shareholders.


In Short

The Asset Reserve Fund provides a clear, on‑chain safety net so that unforeseen losses are covered by the protocol—not by individual depositors.

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