APSS Mechanics Analyses

1

User Initial Purchase

A user begins with $100 USDC and purchases DFY through the DFY/USDC Uniswap pool:

• Transaction: $100 USDC → 99.45 DFY

• Costs: 0.3% Uniswap trading fee + 0.25% Uniswap service fee = 0.55% total ($0.55)

• Result: User holds 99.45 DFY stablecoins

2

APSS Response

The system detects the price impact and executes an atomic stabilization sequence:

• Calculates required DFY supply adjustment to neutralize the price impact

• Triggers the minting engine to create the precise DFY amount needed

• Sells newly minted DFY to the pool within the same transaction as the user

• Deposits generated USDC from selling the newly minted DFY into the protocol reserve

3

Profit Calculation

The APSS generates 99.98 USDC in total proceeds after stabilizing the price, while only 99.45 DFY enters circulation. This creates immediate overcollateralization of 0.53 USDC, representing a 0.53% profit margin per transaction

4

Collateral Allocation

The protocol achieves overcollateralization by retaining 0.53 USDC as pure arbitrage profit in the protocol reserve, while deploying 99.45 USDC to Avantgarde yield strategies to generate additional returns on the backing collateral. This overcollateralization will be reflected in the DFY+ price.

Additional Revenue Streams

Beyond atomic arbitrage capture, the protocol generates additional revenue through its role as a liquidity provider in the DFY/USDC pool. Since the protocol owns the liquidity, it collects a share of the trading fees generated by user transactions in the official pool. These fees are distributed according to the following mechanism:

1

Fee Burning Mechanism

DFY tokens collected as AMM fees are permanently burned, reducing circulating supply while the collateral value remains unchanged. This systematic supply reduction creates overcollateralization that will be reflected in the DFY+ price.

2

USDC Fee Accumulation

USDC collected through AMM fees flows directly to protocol liquidity reserve. This creates systematic overcollateralization that will be reflected in the DFY+ price.

Atomic arbitrage profits plus AMM fee accumulation generate an average of 0.6% profit per transaction, creating sustainable revenue that scales with trading volume.