What Note Systems Is
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Note Systems matches two sides of an autocallable barrier note. COUPON holders deposit USDG notional and receive conditional coupons. SHIELD holders escrow Stock Tokens and prefund those coupons and the notional fee in exchange for conditional protection at maturity.
The Product in Plain Terms
An autocallable barrier note pays a fixed coupon at scheduled dates as long as the underlying stock is not below a barrier. If the stock reaches the configured autocall level at an intermediate observation, the note ends early and COUPON principal is returned in USDG. The autocall level is a percentage of the strike price, not necessarily the strike price itself.
If at maturity the stock is below the barrier, the buyer receives the stock at the starting price instead of cash, and so takes the loss.
In traditional markets this product is issued by a bank that warehouses the embedded option and hedges it. Note Systems replaces the bank with an escrow and a second leg, SHIELD, that is the exact mirror of the note.
The Two Legs
| Role | COUPON | SHIELD |
|---|---|---|
| Deposit | USDG notional | Stock Tokens plus USDG coupon and notional-fee prefund |
| Paid observation | Receives the coupon net of its fee | Pays the gross coupon from prefund |
| Autocall or no maturity breach | Receives principal in USDG | Receives stock back plus unused prefund |
| Maturity barrier breach | Receives Stock Tokens at the strike price | Delivers stock and receives USDG notional plus unused prefund |
| Main market exposure | Stock delivered may be worth less than deposited notional | Fees and coupons are costs; a fall above the barrier receives no protection settlement |
Both legs are transferable ERC-1155 tokens. One raw leg unit is one raw quote unit of matched notional. With six-decimal USDG, 1 USDG corresponds to 1,000,000 raw leg units.
What the Protocol Does Not Do
- The note core does not lend, borrow or liquidate positions. It holds the assets backing matched obligations in escrow; separate credit integrations have their own liquidation risks.
- The core relies on Stock Tokens, USDG, the oracle and the calendar. Periphery and credit integrations add dependencies; see Oracle and MarketCalendar and Credit.
- It does not mint synthetic equity exposure. Physical settlement only redistributes Stock Tokens that already exist.
- It does not take principal risk in
NoteCore. Protocol revenue is a fee on coupons and a one-off fee on matched notional (see Fees).
Module Map
Chain and Assets
fact Robinhood Chain Stock Tokens are ERC-20 tokens whose corporate actions (including reinvested dividends) are expressed through an ERC-8056 uiMultiplier, and per-token Chainlink feeds already include that multiplier, per the Robinhood building guide. The protocol therefore never re-applies the multiplier.
fact Network identifiers and deployed contract addresses are listed in Addresses. Verify the network and contract version before interacting.
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