Stability Mechanisms

Building price stability through liquidity, arbitrage, and controlled minting

The NAV Foundation

Daily Price Discovery

Every day, Manifest calculates the Net Asset Value (NAV) of $USH — the fair value of each token based on the underlying real estate portfolio. This NAV reflects the aggregate home price appreciation of properties in Manifest's portfolio, typically growing 3–5% annually.

Think of NAV as the "book value" of $USH. If the portfolio holds $100 million in assets and there are 10 million tokens, the NAV is $10 per token. When home prices in the portfolio appreciate 0.01% in a day, NAV grows to $10.001.

This daily NAV calculation provides the anchor point for all of $USH's stability mechanisms. While tokens can trade above or below NAV based on market dynamics, the protocol's various mechanisms work to keep market prices aligned with this fundamental value.

Why NAV Matters

NAV serves as the gravitational center for $USH pricing. While tokens can trade at premiums or discounts on secondary markets, the protocol's mechanisms continuously pull prices back toward this fair value. This creates predictable pricing that reflects real asset values. The NAV calculation process ensures accurate tracking of home price appreciation.

Primary Market Mechanics

Automated Minting

The protocol's main liquidity stability mechanism is a Uniswap v4 pool. When demand pushes the $USH price above NAV, the protocol mints new tokens directly into the pool. This increases supply at precisely the price point where demand exceeds equilibrium, naturally bringing prices back down.

Always on Pricing

Uniswap v4 provides a continuous price for investors to buy or sell their USH. This means there is never a disorderly price collapse since liquidity is available at all price.

Arbitrage Dynamics

Cross-Market Alignment

With $USH trading on multiple DEXs, price discrepancies create arbitrage opportunities. When secondary market prices deviate from the primary market NAV, arbitrageurs can:

• Buy low on one market, sell high on another

• Buy from the Uniswap v4 pool at ~NAV when secondary markets trade at premiums

• Capture spreads that naturally align all market prices

These profit opportunities ensure that rational actors continuously push all $USH markets toward NAV, regardless of temporary supply/demand imbalances.

The Role of MEV

Maximum Extractable Value (MEV) searchers play a crucial stability role. Their bots monitor all $USH markets continuously, executing trades within blocks to capture even tiny price discrepancies. This high-frequency arbitrage creates extremely tight price correlation across all venues.

Protocol-Owned Liquidity

Stability Buffer

The protocol maintains up to 20% of TVL as Protocol-Owned Liquidity (POL). This POL serves multiple stability functions:

• Broad Price Support: Ensures continuously liquidity for normal trading across all price ranges

• Price Support: Provides buying power during market stress

• Yield Generation: Earns nominal fees while supporting the ecosystem

Dynamic Management

POL isn't static. The protocol actively manages these positions based on market conditions:

• Protecting liquidity during volatile periods

• Harvesting fees for protocol operations

• Rehypothecating idle capital for additional yield

Importantly, POL shifts over time with NAV. The dynamic management aims to support dependable liquidity at NAV for entry and exit from the protocol.

Premium and Discount Management

Natural Premiums

When $USH trades above NAV on secondary markets, this might reflect:

• Cost of KYC for primary market access

• Market optimism about future growth of the U.S. housing market

Small premiums can be healthy, compensating arbitrageurs while maintaining accessibility.

Handling Discounts

When sell pressure pushes $USH below NAV, several dynamics help restore equilibrium:

Yield Enhancement: As POL decreases from processing redemptions, the protocol holds a higher proportion of HEIs relative to cash. This reduces cash drag and increases effective yields for $sUSH holders, making staking more attractive, thus driving base demand for $USH.

Strategic Incentives: Manifest can deploy governance tokens or points program emissions to incentivize $USH purchases or liquidity provision during discount periods.

Natural Arbitrage: Sophisticated buyers recognize the opportunity to acquire $USH below NAV, creating organic buy pressure.

Staking Opportunity: Investors can buy discounted $USH and immediately stake for $sUSH, capturing both the discount-to-NAV and ongoing staking yields.

Reserve Pool as Stability Layer

The Reserve Pool adds another stability dimension by:

• Absorbing variations: Settlement reconciliation prevents individual HEI performance from affecting $USH stability

• Building confidence: $USA holders take first loss, protecting senior positions

• Smoothing operations: Daily yields continue regardless of settlement timing

The Reserve Pool ensures protocol operations remain stable even when individual assets behave unexpectedly.

The Ultimate Backstop: Redemption Rights

The most powerful stability mechanism is the right of $USH holders to vote for full portfolio liquidation. If 60% of token holders vote for redemption, the protocol must:

• Liquidate all HEI assets

• Convert proceeds to $USDC

• Distribute proportionally to all token holders

This right prevents $USH from trading at a deep persistent discount to NAV. Any significant discount creates an arbitrage opportunity: buy cheap $USH, organize a redemption vote, and capture the difference between market price and NAV. Learn more about redemption options.

Unlike other RWA tokens that trap investors, this redemption right provides a genuine exit at fair value, making $USH behave more like a closed-end fund than a typical token.

Long-Term Stability

Duration Matching

The protocol's stability comes from thoughtful duration matching. By incentivizing $USH staking and LP positions, Manifest designs the system to have sufficient liquidity to process immediate redemptions for all unstaked $USH.

Asset Liquidations

The protocol can, if needed, seek to partially sell assets to generate cash to purchase $USH tokens on the open market. This provides a counter balancing mechanism in the event of significant, sustained price dislocations.