Buyback auction

Summary

fact RevenueRouter is the protocol feeSink. On notifyFee(USDG, amount) it splits buybackBps (9,000 in DeployToken.s.sol) into the buyback reserve and forwards the remainder (1,000) to the Treasury (FeesRouted). Anyone may call sellNoteForQuote(noteAmount, minQuoteOut) and be paid at the current auction price from the buyback reserve. Purchased NOTE is transferred to sNOTE and notifyReward is called in the same transaction.

Price

floor(t) = Treasury.reserveValueQuote / Treasury.circulatingSupply (quote WAD per NOTE) P(t) = floor + (startPriceWad − floor) × 2^(−(t − lastFillTime) / halfLifeSeconds) after fill: startPriceWad = P(t) × (1e4 + bumpBps) / 1e4; lastFillTime = t fill cap: quoteOut ≤ buybackReserve × maxFillBps / 1e4

Parameter	Deploy-script value	Bounds
`buybackBps`	9,000 (90%)	≤ 10,000
`halfLifeSeconds`	6 hours	5 minutes to 30 days
`bumpBps`	2,000 (20%)	≤ 10,000
`maxFillBps`	2,500 (25% of reserve)	≤ 10,000

2^(−x) is computed by ExpMath.halfLifeDecayWad, a fixed-point exponential with bounded error tested against reference values.

Worked example

illustrative Floor 0.50, startPriceWad 1.20 after the last fill.

Hours since last fill	Decay factor 2^(−t/6h)	P(t) = 0.50 + 0.70 × factor
0	1.0000	1.2000
3	0.7071	0.9950
6	0.5000	0.8500
12	0.2500	0.6750
24	0.0625	0.5438
48	0.0039	0.5027
∞	0	0.5000 (floor)

A seller fills at hour 6 for 0.85. The start price bumps to 0.85 × 1.20 = 1.02 and decay restarts from there. If the buyback reserve holds 200,000 USDG, one fill pays at most 50,000 USDG (25%), buying 58,823.5 NOTE at 0.85.

The auction never pays below the Treasury floor, and each fill raises the start price so the next seller must wait for decay or accept the reset price.

Properties

No DEX dependency. Buybacks do not route through an AMM, so there is no pool to sandwich and no price impact fee paid to LPs.
Floor-aware. Because floor(t) is read live from the Treasury, the auction adjusts automatically as reserves grow.
Rate-limited. The fill cap and bump limit how fast a single seller can drain the reserve in a volatile market; the exponential decay ensures the reserve is still spent within hours or days rather than sitting idle.
Reward routing. Every fill immediately becomes an sNOTE reward stream; there is no manual distribution step.

Governance surface

Function	Effect
`setSplit(buybackBps)`	Fee split
`setAuctionParams(halfLife, bumpBps, maxFillBps)`	Auction shape
`resetAuction(newStartPriceWad)`	Reset start price (`AuctionReset`), for example after a long idle period
`sweep(token, to, amount)`	Recover a non-quote token sent by mistake (`Swept`); the quote token cannot be swept
`sync()`	Permissionless: splits any quote balance not yet routed (`FeesRouted`), used after a paused period

Treasury and sNOTE addresses are immutable constructor arguments; there is no setter for either destination.

Failure modes

If the buyback reserve is empty, sellNoteForQuote reverts with FillExceedsCap(requested, 0). Nothing is lost; the next fee sweep refills it.
If the Treasury’s circulatingSupply is zero, floorPriceWad returns zero and the auction decays towards zero. This happens only before any NOTE circulates. If startPriceWad is at or below the floor, currentPriceWad returns the floor.
notifyFee emits FeeNotified even while paused, but the split is deferred until sync() after unpausing, so sweepFees on NoteCore is never blocked by a router pause.
If the start price has decayed to the floor and NOTE trades above the floor, no seller appears and the reserve accumulates until governance resets the start price or the market falls.