Commitment
The deposit principal sent to a Thaler vault is protected from loss caused by ordinary market variance. Specifically, the protocol commits to return at least the deposit amount, in SOL, on a normal close. “Ordinary market variance” includes:- Adverse moves in the price of SOL during the holding period.
- Funding-rate flips on the perpetual hedge that would otherwise erode the position.
- Borrow-rate spikes that compress the lending spread to zero or briefly invert it.
- Short-term liquidation pressure inside the policy buffer.
Mechanism
Two mechanisms operate in series to deliver the commitment.1
The immutable policy
The Squads policy extension constrains the strategy so that the worker cannot put the
deposit into a position outside the protocol’s risk budget. The leverage cap, the
loan-to-value buffer, the venue allowlist, and the rebalance rules are all encoded in the
policy. Nothing the worker emits can take the position past those bounds.
2
The protocol reserve
Thaler maintains a protocol reserve denominated in SOL. The reserve sits outside any
individual vault and is sized to absorb residual variance across the active vault set.
When a vault produces less than the deposit at close, the reserve tops the payout back to
the deposit amount.
What protection does not cover
The excluded cases are described in detail under Risk disclosure.
Verifying the protection
1
Find the vault address
The Squads smart account address appears under the vault number on the My Vaults screen.
2
Open a block explorer
Paste the address into Solscan or
Solana Explorer.
3
Read the policy extension
The policy lists the allowed programs, the leverage cap, the rebalance rules, and the
closure procedure. The on-chain policy and the strategy summary in the app must agree
exactly.
4
Locate the reserve
The protocol reserve is a dedicated public Squads vault. Its address is available on
request via
audit@thaler.finance. Both inflow and outflow are visible to anyone with a
block explorer.Reserve sizing methodology
The reserve is sized against the worst observed annual outcome in the V12 walk-forward backtest across the supported venues. The protocol keeps a margin above the historical worst case so that an outlier year cannot exhaust the reserve. The reserve grows with capacity. As more vaults open, additional capital is allocated to the reserve so the per-vault cover stays at least as conservative as the day-one ratio. The protocol publishes the reserve size and the vault count it backs in the analytics endpoints.Comparison with alternative postures
Thaler preserves the variable upside the strategy actually produces and anchors the principal plus a per-tier floor. The trade-off is built into the reserve sizing and the service fee.
Next read
Yield floor
The minimum return commitment that sits on top of principal protection.
Risk disclosure
The residual risks no on-chain policy can fully eliminate.