The PSM
The peg-stability module is the protocol's two-way converter between wrapper tokens (real tokenized stocks such as R.SPY) and eTokens. It is fee-free, permissionless, and needs no market maker.
What it does
| Direction | Operation | Result |
|---|---|---|
| Wrapper → eToken | psmMint | Deposit R.SPY, receive eSPY at the oracle-derived ratio; the wrapper joins the Reserve Vault |
| eToken → wrapper | psmRedeem | Burn eSPY, receive R.SPY from the Reserve Vault 1:1 by value |
The conversion ratio comes from the oracle (wrapper price over asset price), so a wrapper trading exactly at its underlying converts 1:1. There is no fee and no spread in either direction.
Why it matters
- The in-kind exit. PSM redemption works instantly, permissionlessly, outside market hours, and even for halted assets. It is exit tier two in the waterfall.
- The arbitrage anchor. If eSPY drifts from SPY's price, anyone can convert through the PSM and close the gap. This disciplines maker spreads without requiring trust in makers.
- The maker-free lane. Anyone holding wrapper tokens can enter or exit eTokens with no counterparty, which is also how Robinhood SPY holders enter the eUSD flow: wrap
R.SPYto eSPY 1:1, then deposit and mint.
Safety: the ratio-jump guard
A conversion-ratio move larger than 1.5% in a single operation freezes that wrapper until an operator acknowledges the corporate action (split, large dividend) behind it. This prevents a corrupted wrapper price from draining a Reserve Vault at a wrong ratio. Reserve exits are also clamped so the vault always still covers the eTokens outstanding.