COUPON

COUPON holders deposit USDG notional and receive coupons when an observation qualifies. At maturity they receive USDG principal or Stock Tokens, depending on the barrier test.

Position

fact COUPON is leg 0 of a series in NoteLegs (ERC-1155), id (seriesId << 1) | 0. One unit is one raw quote unit of matched notional (10⁻⁶ USDG for 6-decimal USDG, so 1 USDG of notional is 1,000,000 units). Units are transferable and composable.

Cash Flows

Accrual Accounting

Coupons are not pushed to holders. NoteCore keeps a per-series cumulative index and a per-holder snapshot.

fact Accrual Accounting Calculation

fact On any ERC-1155 transfer, NoteLegs calls NoteCore.onLegTransfer(seriesId, leg, from, to, amount) before balances change. The hook settles the sender’s and receiver’s accrued coupons into claimableQuote and updates both snapshots. A buyer of COUPON units on a secondary market therefore never inherits the seller’s unclaimed coupons, and a seller never loses them.

fact Who earns an observation’s coupon. The coupon of observation i is credited to the index when observe for index i is processed, not at the official close itself. It therefore belongs to whoever holds the COUPON units at the moment of that observe call. Between the close (plus the oracle grace) and the crank, the coupon is pending on the leg: a seller who cranks first (an explicit observe, or a lazy crank through claim, settle, redeem or refund) captures it before transferring; a buyer who cranks first receives it. Anyone may call observe, so a buyer should crank, or check NoteCore.observationDue(seriesId), before paying for units with a pending observation. Marketplaces are expected to surface that flag as a “crank before trading” warning.

Example

illustrative Holder A has 60,000 USDG of notional (60,000,000,000 raw units) and Holder B has 40,000 USDG (40,000,000,000 raw units). Each paid observation distributes 337.50 USDG net across the 100,000 USDG series, using the worked-example assumptions.

illustrative The transferred units represent 10,000 USDG of notional. Holder C earns only the third observation’s coupon; Holder A retains the first two observations’ accrual.

illustrative Holder A Reconciliation; All Amounts in USDG

Redemption

• Autocalled / Matured, not breached: redeem(seriesId, units) burns units, pays units raw USDG (1 USDG per 1e6 units).
• Matured, breached: redeem(seriesId, units) burns units, pays previewRedeem(seriesId, 0, units).stockOut Stock Token wei, using the strike price and strike quote rate. See Physical Settlement.
• previewRedeem(seriesId, 0, units) returns (quoteOut, stockOut) for the current state.

Refund

If the series was oversubscribed on the COUPON side, the unmatched share of each deposit is refundable after strike via refund(seriesId). If the series was cancelled, the full deposit is refundable. See Coupon discovery for the pro-rata rule.

Risk Summary for COUPON Holders

• Principal is at risk if the final observation is below the barrier: you receive stock worth S_T / s0 of your notional. See Market risk.
• Coupons for observations below the barrier are not paid and not recovered.
• Early autocall caps total coupons. The higher the stock at the first intermediate observation, the shorter the trade.
• Escrow reduces reliance on a note counterparty but does not remove smart-contract, USDG issuer or Stock Token issuer risk. See Issuer risk.