Capital Lifecycle

Overview

Capital in Upside follows a defined lifecycle from depositDepositThe action of investing collateral into a raise. Collateral is received by the raise contract, routed to the yield strategy, and a pFT position NFT is minted. At deposit time, a live oracle price feed determines USD notional for FT allocation via deposit-time conversion. through yieldYieldReturns generated by the yield strategy on deposited collateral. Variable and not guaranteed. Distributed via the yield waterfall: platform fee (10%) to DAO, then net yield (90%) to the project. generation to exit. This page traces that path and shows how principal protectionPrincipal ProtectionThe structural guarantee that investors can always redeem their deposited collateral via the perpetual PUT. Protection is proportional to reserve backing, not a fixed dollar guarantee., yieldYieldReturns generated by the yield strategy on deposited collateral. Variable and not guaranteed. Distributed via the yield waterfall: platform fee (10%) to DAO, then net yield (90%) to the project. routing, and buyback and burnBuyback and BurnMechanism where released capital from withdraws and yield surplus are used to buy back and burn project tokens, reducing circulating supply. connect.

Deposit to Strategy

When an investor depositsDepositThe action of investing collateral into a raise. Collateral is received by the raise contract, routed to the yield strategy, and a pFT position NFT is minted. At deposit time, a live oracle price feed determines USD notional for FT allocation via deposit-time conversion. collateralCollateralThe asset an investor deposits into a raise (e.g., USDC, WETH). Each accepted collateral type runs in an isolated pool with independent reserve accounting. Active collateral is routed to the yield strategy and backs investor principal protection.:

1. CollateralCollateralThe asset an investor deposits into a raise (e.g., USDC, WETH). Each accepted collateral type runs in an isolated pool with independent reserve accounting. Active collateral is routed to the yield strategy and backs investor principal protection. is received by the raise contract
2. Capital is routed to the yield strategyYield StrategyProtocol used to generate yield on deposited capital. Aave V3 is the only supported strategy at launch. Yield funds the platform fee, project ecosystem budget, and buyback and burn. (Aave V3 at launch)
3. A pFTpFTERC-721 position token representing an investor's position. Stores collateral token, amounts, FT(fundraising token) allocation, and strike/oracle context. Transferable as a standard NFT. position NFT is minted recording the depositDepositThe action of investing collateral into a raise. Collateral is received by the raise contract, routed to the yield strategy, and a pFT position NFT is minted. At deposit time, a live oracle price feed determines USD notional for FT allocation via deposit-time conversion. details
4. Capital immediately begins earning yieldYieldReturns generated by the yield strategy on deposited collateral. Variable and not guaranteed. Distributed via the yield waterfall: platform fee (10%) to DAO, then net yield (90%) to the project. in the strategy

All depositedDepositThe action of investing collateral into a raise. Collateral is received by the raise contract, routed to the yield strategy, and a pFT position NFT is minted. At deposit time, a live oracle price feed determines USD notional for FT allocation via deposit-time conversion. capital is put to work. There is no idle reserveReserveThe pool of collateral backing investor positions in a raise. In normal operation, each investor's proportional share equals their original deposit. In a shortfall, proportional settlement ensures fair distribution. Reserve accounting is per-raise (isolated)..

Yield Generation and Distribution

Strategy yieldYieldReturns generated by the yield strategy on deposited collateral. Variable and not guaranteed. Distributed via the yield waterfall: platform fee (10%) to DAO, then net yield (90%) to the project. follows a waterfallYield WaterfallThe distribution order of gross strategy yield: platform fee (10%) to DAO, then net yield (90%) to the project for ecosystem budget and buyback and burn allocation., with a platform feePlatform FeePercentage of yield taken by the platform (10% at launch), allocated to the DAO. No fee is charged on core user actions (deposit, redeem, withdraw). taken first:

Gross strategy yield
  -> Platform fee (10% of yield) -> DAO
  -> Net yield (90%) -> Project
     -> Ecosystem budget
     -> Buyback and burn allocation

See Fees and Economics for full fee breakdown and economics.

Project-side routing between ecosystem budget and buybackBuyback and BurnMechanism where released capital from withdraws and yield surplus are used to buy back and burn project tokens, reducing circulating supply./burn is configured by project policy. Claiming is permissionless, anyone can trigger the yieldYieldReturns generated by the yield strategy on deposited collateral. Variable and not guaranteed. Distributed via the yield waterfall: platform fee (10%) to DAO, then net yield (90%) to the project. claim function. Cadence is operationally flexible (daily, weekly, or threshold-driven).

Exit Paths and Capital Effects

Redeem (exercise PUT)

When an investor redeemsRedeemExercise principal protection and exit to collateral. Implemented by the divest contract function. Always available, permissionless, and on-chain.:

• CollateralCollateralThe asset an investor deposits into a raise (e.g., USDC, WETH). Each accepted collateral type runs in an isolated pool with independent reserve accounting. Active collateral is routed to the yield strategy and backs investor principal protection. is partially or completely withdrawnWithdrawClaim project tokens and forfeit principal protection on the withdrawn amount. Implemented by withdrawFT. Requires transferable to be enabled. Released capital moves to capitalDivesting for buyback and burn. from the strategy
• CollateralCollateralThe asset an investor deposits into a raise (e.g., USDC, WETH). Each accepted collateral type runs in an isolated pool with independent reserve accounting. Active collateral is routed to the yield strategy and backs investor principal protection. is returned directly to the investor
• The position’s FTFT (Fundraising Token)The project's token being sold in a raise. Investors receive fundraising token allocation at deposit time, which they can later withdraw to claim the FT tokens. allocation is released back to the available pool
• collateralSupplyCollateral SupplyState variable (collateralSupply[token]) tracking active backing collateral per token type. Increases on deposit, decreases on redeem. decreases

Capital leaves the system entirely.

Withdraw (claim FT)

When an investor withdrawsWithdrawClaim project tokens and forfeit principal protection on the withdrawn amount. Implemented by withdrawFT. Requires transferable to be enabled. Released capital moves to capitalDivesting for buyback and burn. FTFT (Fundraising Token)The project's token being sold in a raise. Investors receive fundraising token allocation at deposit time, which they can later withdraw to claim the FT tokens.:

• FTFT (Fundraising Token)The project's token being sold in a raise. Investors receive fundraising token allocation at deposit time, which they can later withdraw to claim the FT tokens. tokens are transferred to the investor
• The equivalent collateralCollateralThe asset an investor deposits into a raise (e.g., USDC, WETH). Each accepted collateral type runs in an isolated pool with independent reserve accounting. Active collateral is routed to the yield strategy and backs investor principal protection. is tracked under capitalDivesting[token]Capital DivestingState variable (capitalDivesting[token]) tracking released collateral available for the project to pull for buyback and burn operations. Increases when investors withdraw FT.
• CollateralCollateralThe asset an investor deposits into a raise (e.g., USDC, WETH). Each accepted collateral type runs in an isolated pool with independent reserve accounting. Active collateral is routed to the yield strategy and backs investor principal protection. remains in the strategy until admin pulls it for buybackBuyback and BurnMechanism where released capital from withdraws and yield surplus are used to buy back and burn project tokens, reducing circulating supply./burn

Capital transitions from active backing to divestingCapital DivestingState variable (capitalDivesting[token]) tracking released collateral available for the project to pull for buyback and burn operations. Increases when investors withdraw FT. state.

Buyback and Burn

Two sources feed buyback and burnBuyback and BurnMechanism where released capital from withdraws and yield surplus are used to buy back and burn project tokens, reducing circulating supply. operations:

1. YieldYieldReturns generated by the yield strategy on deposited collateral. Variable and not guaranteed. Distributed via the yield waterfall: platform fee (10%) to DAO, then net yield (90%) to the project. surplus allocated to buybackBuyback and BurnMechanism where released capital from withdraws and yield surplus are used to buy back and burn project tokens, reducing circulating supply. by project policy
2. Released capital from exits via withdrawWithdrawClaim project tokens and forfeit principal protection on the withdrawn amount. Implemented by withdrawFT. Requires transferable to be enabled. Released capital moves to capitalDivesting for buyback and burn. (capitalDivesting)

How exits via withdraw fund buyback

When investors claim FTFT (Fundraising Token)The project's token being sold in a raise. Investors receive fundraising token allocation at deposit time, which they can later withdraw to claim the FT tokens. (exit via withdrawWithdrawClaim project tokens and forfeit principal protection on the withdrawn amount. Implemented by withdrawFT. Requires transferable to be enabled. Released capital moves to capitalDivesting for buyback and burn.), backing capital for that portion is released into capitalDivesting. Admin can later pull this capital for buyback and burnBuyback and BurnMechanism where released capital from withdraws and yield surplus are used to buy back and burn project tokens, reducing circulating supply. operations.

Supply dynamics

The project’s token circulating supply only increases when investors withdrawWithdrawClaim project tokens and forfeit principal protection on the withdrawn amount. Implemented by withdrawFT. Requires transferable to be enabled. Released capital moves to capitalDivesting for buyback and burn.. Investors only withdrawWithdrawClaim project tokens and forfeit principal protection on the withdrawn amount. Implemented by withdrawFT. Requires transferable to be enabled. Released capital moves to capitalDivesting for buyback and burn. when the token price exceeds their redemptionRedeemExercise principal protection and exit to collateral. Implemented by the divest contract function. Always available, permissionless, and on-chain. value. Unlike traditional vesting where tokens unlock on a timer regardless of performance, new tokens only enter circulation when the raise is succeeding.

The capital released by each withdrawalWithdrawClaim project tokens and forfeit principal protection on the withdrawn amount. Implemented by withdrawFT. Requires transferable to be enabled. Released capital moves to capitalDivesting for buyback and burn. funds buybacksBuyback and BurnMechanism where released capital from withdraws and yield surplus are used to buy back and burn project tokens, reducing circulating supply. that offset the new supply. Supply inflation has a built-in counterweight.

Capital flow summary

Deposit
  -> Active backing (in strategy, earning yield)
    -> Redeem: collateral returned to investor (exits system)
    -> Withdraw FT: collateral moves to capitalDivesting
      -> Admin pulls for buyback and burn
        -> Tokens bought back and burned, reducing supply