DA-06 · LESSON 07

Protocol revenue

KEY DEFINITIONS

Terms used in this lesson

Collateral: An asset pledged against a debt; it can be used to cover the debt if agreed conditions are breached.
Block subsidy: New bitcoin that consensus permits a block's coinbase transaction to create at a particular height.
UNIT: Ducat’s dollar-pegged stablecoin, the asset a borrower can create against bitcoin collateral.

Fees, spreads, issuance activity, liquidations, and reserve deployment form scenarios rather than guaranteed protocol revenue.

55 min Difficulty 5/5 Not started

VISUAL MODEL

See the whole mechanism before going step by step

Use the diagrams to orient yourself. Then the guided explanation below teaches every part in depth.

4 explanatory views

CONCEPT-SPECIFIC MAP · ducat vaultA Ducat action moves one Bitcoin-anchored vault state to a successorSelect any state to inspect its exact role.

RELATIONSHIP MAPInputs, rule, and outputs

01
PREDECESSORCurrent vault outpoint
The current Bitcoin output anchors collateral and identifies the state being spent.
02
REQUESTProtocol revenue
The Protocol revenue workflow proposes one exact action and successor state.
03
POLICYProfile, oracle, signatures
Applicable policy, price evidence, authorization, and transaction shape are checked.
04
BITCOIN SPENDScript-valid transaction
Bitcoin miners and nodes can include only a transaction that satisfies Bitcoin rules.
05
SUCCESSORNew outpoint and state
Ducat validators reconstruct debt, collateral, token, and account changes from the confirmed transaction.

Rule shown: Bitcoin checks the spend; Ducat components independently reconstruct and validate the additional protocol state.

STAGE 1 OF 5PREDECESSOR: Current vault outpoint

The current Bitcoin output anchors collateral and identifies the state being spent.

Governing relationship: Bitcoin checks the spend; Ducat components independently reconstruct and validate the additional protocol state. Complete path: 1. PREDECESSOR, Current vault outpoint. The current Bitcoin output anchors collateral and identifies the state being spent. 2. REQUEST, Protocol revenue. The Protocol revenue workflow proposes one exact action and successor state. 3. POLICY, Profile, oracle, signatures. Applicable policy, price evidence, authorization, and transaction shape are checked. 4. BITCOIN SPEND, Script-valid transaction. Bitcoin miners and nodes can include only a transaction that satisfies Bitcoin rules. 5. SUCCESSOR, New outpoint and state. Ducat validators reconstruct debt, collateral, token, and account changes from the confirmed transaction.

1. State transitionWhat exists, what changes, and what results

BEFORE

For teaching only, a period has $100,000 of borrowing volume, a stated 1 percent origination fee paid to the protocol, $500 of pass-through network fees, $300 of operating co…

MECHANISM

For issuance, fees, liquidations, spreads, and reserve deployment, identify payer, recipient, asset, date, and obligation.

AFTER

Volume is not revenue, principal is not revenue, and revenue is not profit. The accounting policy and actual fee terms are unresolved commercial inputs.

Text equivalent: Starting from For teaching only, a period has $100,000 of borrowing volume, a stated 1 percent origination fee paid to the protocol, $500 of pass-through network fees, $300 of operating costs, and $100 of realized loss. No current Du… The mechanism begins when For issuance, fees, liquidations, spreads, and reserve deployment, identify payer, recipient, asset, date, and obligation. The resulting lesson is Volume is not revenue, principal is not revenue, and revenue is not profit. The accounting policy and actual fee terms are unresolved commercial inputs.

2. Mechanism pathSelect a stage to inspect its job

STAGE 1 OF 4

Map each gross flow

For issuance, fees, liquidations, spreads, and reserve deployment, identify payer, recipient, asset, date, and obligation.

Complete path: 1. Map each gross flow: For issuance, fees, liquidations, spreads, and reserve deployment, identify payer, recipient, asset, date, and obligation. 2. Apply recognition rules: State when a flow becomes earned revenue rather than liability, collateral movement, pass-through, or unrealized value. 3. Remove duplication: Do not count both transaction volume and the fee generated from that volume as two revenues. 4. Separate profit: Subtract direct costs, losses, financing, incentives, operations, and other expenses from recognized revenue.

3. Rule and failure boundaryWhat accepts the result and where it can stop

ACCEPTED PATH

The worked case executes the named inputs and checks in the displayed order. Subtract direct costs, losses, financing, incentives, operations, and other expenses from recognized revenue.

CHANGED CONDITION

A missing, malformed, stale, unauthorized, or inconsistent required input stops at its first named boundary. Issuance creates an asset for a borrower and corresponding debt or protocol obligation; principal issuance is not automatically earned revenue.

Important distinction: Every UNIT issued is one dollar of protocol revenue. Issuance creates an asset for a borrower and corresponding debt or protocol obligation; principal issuance is not automatically earned revenue.

Text equivalent: The accepted path is enforced by The worked case executes the named inputs and checks in the displayed order. Subtract direct costs, losses, financing, incentives, operations, and other expenses from recognized revenue. If the required condition changes, A missing, malformed, stale, unauthorized, or inconsistent required input stops at its first named boundary. Issuance creates an asset for a borrower and corresponding debt or protocol obligation; principal issuance is not automatically earned revenue.

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Learn the idea

Protocol revenue is recognized inflow attributable to the protocol under a stated accounting policy. Transaction volume, UNIT issuance, fees charged, reserve movements, and liquidator transfers are not automatically the same as revenue or profit.

GUIDED EXPLANATION1/4 ideas inspected

Map each gross flow

For issuance, fees, liquidations, spreads, and reserve deployment, identify payer, recipient, asset, date, and obligation.

The worked example follows the explanation

Inspect every idea above to open it.

Important distinction“Every UNIT issued is one dollar of protocol revenue.”

Issuance creates an asset for a borrower and corresponding debt or protocol obligation; principal issuance is not automatically earned revenue.

FINISH LEARNING FIRST

The questions unlock after every required learning activity

Inspect every guided idea, open the worked example, rebuild its mechanism, and complete the deterministic lesson tool. Your progress is saved automatically.