GUIDE 04 / 05
Buybacks & vesting
What is purchased, where it goes and how locking differs from burning.
The asset being bought back
A PASSIVE buyback purchases existing PASSIVE tokens from the market. It does not mint new PASSIVE and does not purchase SPY for wallet holders.
SPY reward allocations and PASSIVE buybacks are separate parts of the flywheel, with different destinations.
How a buyback is executed
The buyback allocation accumulates through the trading mechanism. Execution processes that allocation into a market purchase, subject to the mechanism’s price-protection limits.
Trading activity, funds awaiting processing and an executed buyback are distinct events. A purchase occurs when the relevant execution transaction succeeds.
The five-year vesting vault
Bought-back PASSIVE is placed in a vault with five-year vesting. The tokens are held under that vault’s release schedule rather than being immediately available to trade.
Vesting means tokens become releasable gradually. It should not be read as every purchased token being inaccessible for exactly five years and then all unlocking together.
Locked supply and total supply
A lock restricts access to tokens while the restriction applies. Those tokens still exist and remain part of total supply.
A burn would permanently destroy tokens and reduce total supply. The buyback mechanism described here uses vesting locks.
How this relates to SPY claims
You claim SPY from your published reward allocations. You do not claim a proportional share of the PASSIVE buyback vault merely by holding PASSIVE.
The buyback vault is excluded from holder-reward calculations. Its balance is not counted as a participating wallet when reward allocations are generated.
What the two vaults do
The rewards vault holds SPY that is available for allocation or reserved for claims. The buyback vault holds purchased PASSIVE under its vesting schedule.
The SPY you claim comes from the rewards vault. Neither claiming nor delaying a SPY claim releases tokens from the buyback vault.