Four laws. No committee.
Everything KELVIN does is one of four formulas, written into the contract and never edited. This page states each law, what it means for a holder, and the arithmetic that enforces it. Where this page and the chain disagree, the chain is right.
Equilibrium
Two systems in contact reach the same temperature.
The market and the treasury are in contact through the pool, and the toll is what moves heat between them. Selling into the cold is expensive; buying into the heat is expensive. Near equilibrium the toll is close to nothing. The toll is not a flat fee and it is not set by anyone: it is a function of the temperature at the moment you trade, read from a time-weighted price, never from spot.
Every toll is taken by the hook at the moment of the swap and routed to the treasury. Below the floor's neighborhood it funds the next buyback; above it, it becomes backing. An unhooked pool pays more, not less: any trade that touches the token outside the canonical pool pays a flat 10% at the token level, which is what keeps the toll where it belongs.
Conservation
Energy is neither created nor destroyed.
The entire supply was minted once, at launch, into a single-sided position in the pool. There is no mint function afterward. Every dollar that has ever bought KELVIN is in the treasury, because the treasury is the only liquidity provider: a buy crosses the protocol's own ticks and the USDG stays in them.
The floor is a high-water mark. It can only be set higher by a larger treasury per token, and nothing in the contract can set it lower. Idle USDG that is not standing at the floor earns yield in a vault; that yield is treasury, so it raises backing, so it raises the floor.
Entropy
Disorder tends to a minimum. Premium decays. Backing does not.
Price above the floor is heat: it can dissipate. Backing is crystal: it cannot. Every mechanism in KELVIN moves value from the hot side to the cold side and never the reverse. Sells cool the market and feed the treasury. Buys heat the market and feed the treasury. Either direction, the crystal grows.
The treasury also trades. When sell pressure rises, it moves USDG from the vault into the cushion just above the floor, so sellers get filled and every token bought is inventory. When buy pressure is strong and price sits well above backing, it lists that inventory as an ask above the current price. It buys low, sells high, and the spread is backing. No new tokens are ever created to do this.
Absolute zero
You can approach absolute zero. You can never reach it.
The floor is not a promise and not a bid someone has to go and hit. It is USDG physically placed in the pool at the floor price, a single tick the treasury owns, sized to buy back every circulating token. Price cannot cross it, because to cross it a seller would have to exhaust it, and the first law says it cannot be exhausted.
Every time the wall is touched the treasury has bought tokens below backing. It burns them, which raises backing for everyone remaining, which raises the floor. That event is an Advance, and each one is inscribed as a crystal in the ledger. The floor has never fallen because there is no code path by which it can.
Recent heat cools faster.
A token bought today carries extra toll if it is sold today. The extra cools to nothing in three days. Enrolled tokens ramp to full reward weight over seven days, and an early exit pays the citizens who stayed, never the protocol.
| Held for | Extra sell toll | Reward weight | Exit penalty |
|---|---|---|---|
| Under 24h | +15% | 50% | 10% → citizens |
| Day 2 | +8% | 57% | 8.6% |
| Day 3 | +3% | 64% | 7.1% |
| Day 4–6 | 0% | 71–93% | 4.3–1.4% |
| Day 7 and after | 0% | 100% | 0% |
Timestamps are weighted on top-ups and inherited on transfer, so a fresh buy cannot be laundered through a second wallet.
Temperature
Price above the floor, in kelvin. 0 K is price equal to floor. 100 K is price at twice the floor. Read from a truncated time-weighted price the hook maintains itself.
The crystal
Backing, shown as the frozen fraction of the market: floor ÷ price. At 50% frozen, the treasury can buy back half of every token at the floor today.
The wall
A single tick of USDG at the floor price, owned by the treasury, sized to the whole circulating supply. The thing price cannot cross.
The cushion
USDG spread between the floor and backing, so a seller near the floor gets progressively worse fills rather than one cliff.
An Advance
The floor stepping up after the treasury buys and burns. Each one is inscribed as a crystal, rendered from the block hash, and minted on chain.
Inventory
Tokens the treasury bought at or below backing and did not burn, held to be sold back above backing when the market runs hot. Never minted.
| Parameter | Value | Changeable |
|---|---|---|
| Supply | 1,000,000,000 · minted once · burns only | No |
| Launch | Single-sided v4 position · ~$5,000 opening market cap | — |
| Toll bounds | 1% base · 10% cap · formula above | No |
| Off-pool token fee | 10% flat on any transfer to a pool that is not the hook's | No |
| Floor ratchet | max(previous, 90% of backing) | No |
| Wall | ≥ floor × circulating, at tick(floor) | No |
| Vault cap | At most 70% of treasury USDG in yield | Within 50–70%, timelocked |
| Rebalance signal | 2h EWMA of net flow · thresholds fixed | No |
| Cooling rate | 15% / 8% / 3% / 0% by day held | No |
| Reward ramp | 50% → 100% over 7 days | No |
| Exit penalty | 10% → 0% over 7 days · paid to citizens | No |
| Oracle | Truncated geomean TWAP kept by the hook | No |
Illustrative values for the prototype. The deployed constants will be read from the contract and shown here in their place.