1 · Status before mechanics
| Item | Status | Consequence |
|---|---|---|
| Phase 1 → Phase 2 conversion | Current architecture | The finite financing leg converts once into standardized perpetual units. |
| Death or incapacity settlement | Unresolved · D-013 | No estate or capitalized-TEB denominator is approved for a real claim. |
| Perpetual-unit buyback | Unresolved · D-014 | No VWAP, reference-value, PV-multiple, floor, drag-along, or partial-retirement rule is approved. |
| Seven-year rollover cycles | Historical research | Superseded. The current unit does not reset into recurring seven-year cycles. |
| MVP lifecycle scenarios | Demo boundary | Death, incapacity, identity withdrawal, and perpetual buyback are excluded while policy is open. |
No implied policy —A formula on this page is preserved design input. It is not a quote, holder right, issuer right, settlement promise, or executable rule.
2 · Current instrument architecture
A covenant can begin with a finite Phase 1 obligation: a defined fraction of realized Total Economic Benefit for a defined term. It also reserves conversion units in the person’s single 10,000-unit registry.
At the contractual conversion time, Phase 1 closes and those reserved units become issued perpetual units. Each unit represents 0.0025 percentage points of the defined perpetual economic claim. Conversion happens once. It does not create a new vintage, restart the financing period, or ask holders to elect another cycle.
| Stage | Financial object | Transition |
|---|---|---|
| Phase 1 | Finite covenant financing obligation plus reserved units | Runs for the signed term unless an approved lifecycle event changes it. |
| Conversion | Reserved person-level units | Move from reserved to issued custody at the fixed conversion time. |
| Phase 2 | Standardized perpetual units | Continue without a recurring seven-year rollover election. |
3 · Lifecycle events are separate policies
Death, incapacity, economic withdrawal, identity withdrawal, buyback, reporting failure, and delisting are not interchangeable. Each needs explicit treatment for the finite financing leg, perpetual units, capacity, orders, positions, distributions, records, and privacy.
| Event | Current treatment |
|---|---|
| Identity withdrawal | Preservation halt: stop public use and trading while preserving financial state. It is not settlement. |
| Economic withdrawal | Open. No voluntary exit price or compelled-retirement right is approved. |
| Reporting failure | A paused state exists, but grace, cure, arrears, escalation, and notice remain open. |
| Delisting | Representable in the ledger; real triggers and holder treatment remain policy and counsel work. |
4 · Death and incapacity · D-013 pending
The preserved research proposed notice to an executor, probate-paced valuation, treatment of illiquid holdings, pro-rata payment, and unsecured-creditor treatment in an insolvent estate. Those mechanics remain useful questions for counsel. They are not approved terms.
The unresolved core is the denominator. An estate-net-worth claim differs economically from a capitalized measure of TEB. The current instrument is defined around TEB, while the historical page used net worth. D-013 requires a founder decision and counsel review before either basis can become a real settlement rule.
Demo rule —The MVP must not schedule death or incapacity. Existing code behavior is characterization, not permission to present a terminal policy.
5 · Perpetual buyback · D-014 pending
The ledger can model a finite Phase 1 buyout with an explicit simulation parameter. It has no approved path to retire perpetual units. A financing-leg buyout is therefore not evidence that the perpetual claim can be retired at the same price or under the same process.
Historical research proposed a 30-day VWAP plus volatility premium, a face-value floor, holder election, and a drag-along threshold. The preserved formula appears below as research. It assumes a liquid tape and introduces parameters and rights that have not been ratified.
Historical research only: P_min = max(VWAP_30d × (1 + z × σ × √T_remaining), face_value × 1.1)
D-014 will decide whether retirement uses a VWAP-premium rule, a reference-value or PV rule, a hybrid, or another mechanism after the demo produces market behavior worth calibrating. Funding, election, partial buybacks, pre-liquidity fallback, and enforceability must be solved with the price rule.
6 · Seven-year rollover is historical research
The former page described recurring seven-year cycles, recommended close-out prices, bilateral rollover elections, automatic rollover, and a twelve-month opt-out. That architecture belonged to an earlier instrument generation and is superseded.
The current covenant has one finite Phase 1 term and one conversion into perpetual Phase 2 units. There is no default seven-year reset, no cycle-close buyback trigger, and no recurring accreditation claim implied by the current product.
7 · Preserved research agenda
| Research retained | Decision required |
|---|---|
| Probate notice, valuation timing, illiquid holdings, priority, and privacy | D-013 plus estate, securities, insurance, tax, and privacy counsel |
| Mortality-adjusted discounting and survival inputs | Model governance, fairness review, data authorization, and evidence |
| VWAP premium, volatility window, price floor, holder election, and drag-along | D-014 plus market evidence and counsel |
| Hardship exit, fee reserve, partial retirement, and pre-liquidity pricing | Founder policy, funding design, capacity treatment, and counsel |
The design goal is a coherent perpetual asset, not perpetual ambiguity. Until the decisions above are recorded, product surfaces must show these states as unavailable or unresolved and preserve existing positions without inventing a terminal price.
Revision: 2026-09-04 · Seven-year rollover marked historical; current conversion architecture and D-013/D-014 gates made explicit.