What Note Systems is

Note Systems is a permissionless market where one side buys a high-coupon autocallable note on a Stock Token and the other side sells the crash protection that funds those coupons. The coupon is discovered on-chain from the imbalance between the two sides rather than set by an issuing bank. A USDG vault, the Desk, takes residual unmatched supply under hard caps.

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 is at or above its starting level on a scheduled date, the note ends early (“autocalls”) and principal is returned. 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

	COUPON	SHIELD
Who	Yield seeker	Stock holder wanting cheap crash protection
Deposits during Subscription	USDG	Stock Tokens plus a USDG prefund of the maximum coupon liability
Earns	A coupon of couponBps of notional at every observation where price ≥ barrier	All coupons stop if the note autocalls; stock returned in full
Best case	Autocall early: principal plus coupons paid	Stock rallies; protection cost is only the coupons actually paid
Worst case	Maturity below barrier: receives Stock Tokens worth less than notional	Pays every coupon; stock recovers above barrier at maturity so the put never pays
Economic identity	Short a down-and-in put struck at S0, long a coupon stream	Long a down-and-in put struck at S0 that switches off on autocall, short the coupon stream

Both legs are transferable ERC-1155 tokens. One unit equals one USDG of matched notional.

What the protocol does not do

• It does not lend, borrow, or liquidate. All obligations are escrowed at subscription.
• It does not integrate other protocols. The only external dependencies are the Stock Token ERC-20s, a Chainlink-style AggregatorV3Interface feed per stock, and the USDG ERC-20 (see Protocol spec dependencies).
• 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

Module A escrows and settles notes and pays fees to the RevenueRouter (feeSink). Module B turns fees into NOTE buybacks streamed to sNOTE, capitalises the Desk through Bonds, and publishes a reserve-value floor via the Treasury.

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.

tbd Chain identifiers, feed addresses and deployment addresses are listed in Addresses once fixed. Verify chain facts at docs.robinhood.com/chain before relying on them.