Unpeg in one page
A seven-day contract on whether a liquid staking token trades below the SOL it holds, and for how long.
The problem
A liquid staking token such as JitoSOL, mSOL or hSOL is backed by SOL sitting in a stake pool. Its fair value, the net asset value, is known on chain. Its market price is whatever the pools trade it at. Most of the time the two match. When they do not, the token trades at a discount, and that discount is the number that liquidates lending positions and stalls withdrawals. Until now there was no clean way to hedge it or to take the other side.
The contract
Unpeg turns the discount into a fixed-term pair. One lot represents 1 SOL of notional. Minting one lot locks 0.03 SOL of wrapped SOL in an isolated vault and issues two transferable notes: one BREAK and one HOLD. Over the next seven days the discount is measured every five minutes. Time spent more than 0.25% below the peg moves value from HOLD to BREAK. At the end, each note is burned for its share of the 0.03 SOL. The two shares always add up to the vault, so nothing is borrowed and nothing can be liquidated.
| If the discount over the week is… | BREAK gets | HOLD gets |
|---|---|---|
| 0.25% or less the whole time | 0 | 0.03 SOL |
| 1% for the whole week | 0.02625 SOL | 0.00375 SOL |
| 3.25% or more for 48 hours | 0.03 SOL | 0 |
You do not have to hold both notes. Mint a pair, keep the side you believe, and sell the other side at a fixed price from escrow. Or buy a side from someone else's offer. The price you pay or receive is the premium; the payout is decided only by the measured discount.
Three things to know before anything else
- Fully funded, no leverageThe maximum payout is in the vault before the first observation. There is no margin, no liquidation, no fee and no yield strategy on the collateral.
- The price is signed, not provenEach five-minute discount is a sampled average of Raydium pool prices, co-signed by two of three reporter keys fixed at series creation. The program checks signatures and sequence, not the truth of the price. Price and reporters
- Missing data pays HOLDIf an interval is not reported by its deadline, anyone can skip it with zero accrual. BREAK holders carry that risk during exactly the period they care about. Risks