# Section B — Immutable Protocol Invariants **Version:** v1.0 These invariants define the non-negotiable constraints of the LSteak protocol and all associated subsystems, including LSaaS. They apply across all market conditions, governance states, upgrades, integrations, and deployments. If any invariant is violated, the protocol is considered to have failed by definition. Previous: [Section A — Definitions & Accounting Glossary](/lsteak-protocol-docs/technical-appendix/section-a-definitions-and-accounting-glossary.md)\ Next: [Section C — Deterministic System Flows](/lsteak-protocol-docs/technical-appendix/section-c-deterministic-system-flows.md) ### Contents * [B.1 Backing-first mint invariant](#b1-backing-first-mint-invariant) * [B.2 No emissions / no rebasing invariant](#b2-no-emissions--no-rebasing-invariant) * [B.3 Backing definition & non-redeemability invariant](#b3-backing-definition--non-redeemability-invariant) * [B.4 Effective supply accounting invariant](#b4-effective-supply-accounting-invariant) * [B.5 Backing Per Token (BPT) authority invariant](#b5-backing-per-token-bpt-authority-invariant) * [B.6 Treasury allocation invariant](#b6-treasury-allocation-invariant) * [B.7 Burn priority invariant](#b7-burn-priority-invariant) * [B.8 Redemption integrity invariant](#b8-redemption-integrity-invariant) * [B.9 xl-LSTEAK redemption ratio (RR) invariant](#b9-xl-lsteak-redemption-ratio-rr-invariant) * [B.10 Value integrity & bounded friction invariant](#b10-value-integrity--bounded-friction-invariant) * [B.11 Governance constraint invariant](#b11-governance-constraint-invariant) * [B.12 Emergency pause limitation invariant](#b12-emergency-pause-limitation-invariant) * [B.13 Mechanical liquidation invariant](#b13-mechanical-liquidation-invariant) * [B.14 LSaaS isolation invariant](#b14-lsaas-isolation-invariant) * [B.15 Invariant supremacy clause](#b15-invariant-supremacy-clause) ### B.1 Backing-first mint invariant **Invariant** LSTEAK may only be minted against backing value that already exists and has been formally accounted for by the protocol. * No minting may occur based on: * projected yield * expected inflows * future revenue * All minting references the current authoritative Backing Per Token (BPT). * Backing added after minting affects only subsequent BPT calculations. **Ordering rule (immutable)** * Minting occurs at the current BPT. * Backing updates occur after minting and produce a new BPT. This ordering is intentional and cannot be altered. ### B.2 No emissions / no rebasing invariant **Invariant** The protocol shall never distribute yield through emissions, inflation schedules, or rebasing mechanisms. * Token balances do not change without explicit user action or burn events. * Total supply changes only through explicit mint or burn operations. * No algorithmic balance rebasing is permitted. This invariant is permanent and cannot be overridden. ### B.3 Backing definition & non-redeemability invariant **Invariant** Backing consists solely of assets explicitly designated as yield-producing backing by the protocol. * Backing assets are non-redeemable under normal operation. * Backing may not be withdrawn, pledged, or indirectly consumed to satisfy routine exits. * Backing exists to increase long-term value density, not to defend short-term liquidity. Backing may only be accessed during explicitly defined liquidation events. ### B.4 Effective supply accounting invariant **Invariant** All internal protocol logic references effective supply, not total supply. Effective supply is defined as: * total minted supply * minus permanently burned supply * minus protocol-controlled non-circulating balances * minus non-redeemable, accounting-only representations (if present) Market price, liquidity depth, and external valuations do not affect effective supply. ### B.5 Backing Per Token (BPT) authority invariant **Invariant** Backing Per Token (BPT) is the sole authoritative internal value anchor. * All minting, routing, burn, and accounting logic references BPT. * Market price deviations do not modify BPT. * BPT increases through: * additional backing * reduction of effective supply * realized yield retained as backing BPT may decrease only during explicitly defined liquidation events. ### B.6 Treasury allocation invariant **Invariant** All protocol-level treasury allocations across LSteak and LSaaS are fixed, immutable, and set at exactly `5%`. This applies to all treasury-directed value flows, including: * LSteak entry flows * LSteak yield routing where treasury allocation exists * LSaaS PYE yield routing where treasury allocation exists LSaaS Value Transfer Loops (VTL) mint LSTEAK with no treasury skim. **Properties** * The `5%` rate is: * deterministic * non-discretionary * uniform across subsystems * Treasury allocation is applied prior to backing updates. * Treasury allocation may introduce bounded, first-order dilution or friction at entry. **Immutability clause** * The `5%` rate cannot be: * modified by governance * bypassed by routing logic * altered by upgrades * conditionally applied Variable or dynamic treasury rates are prohibited. **Asymptotic integrity clause** The relative impact of treasury allocations must decrease as total backing and TVL increase. Treasury impact is linear at entry and cannot compound independently of system growth. ### B.7 Burn priority invariant **Invariant** When excess value is generated by internal protocol actions, burns take precedence over redistribution. * Burns permanently reduce effective supply. * Burn logic cannot be bypassed or redirected by governance. * Burned value cannot be reintroduced. Burns are final and irreversible. ### B.8 Redemption integrity invariant **Invariant** Normal user exits must not consume backing. * LSTEAK exits are fulfilled via market liquidity. * xl-token exits (e.g. xl-LSTEAK, `xl-*`) are fulfilled via contract redemption. * These redemptions must not consume backing. * Backing remains intact during standard operation. * Backing access is prohibited outside liquidation events. This invariant prevents gradual or silent backing leakage. ### B.9 xl-LSTEAK redemption ratio (RR) invariant **Invariant** xl-LSTEAK redemption ratios are non-decreasing under normal operation. * RR increases via: * yield allocation * backing-denominated value transfers * supply reduction * RR may experience bounded micro-friction due to: * slippage in value-transfer loops * routing costs **Constraint** Such friction must be: * explicitly defined * value-conservative * asymptotically insignificant as system scale increases RR may decrease only during liquidation events. ### B.10 Value integrity & bounded friction invariant **Invariant** Core value metrics (BPT, RR, backing density) must not experience unbounded or discretionary degradation. **Permitted (explicitly)** * fixed `5%` treasury allocations (B.6) * mint-ordering effects * deterministic routing friction * bounded slippage in LSaaS loops **Prohibited** * compounding dilution independent of growth * governance-enabled extraction * hidden or undocumented leakage * value decay that scales with system size All friction must be disclosed, bounded, auditable, and invariant-defined. ### B.11 Governance constraint invariant **Invariant** Governance is bounded, timelocked, and subordinate to protocol invariants. Governance cannot: * enable emissions or rebasing * redefine backing * override burn logic * alter treasury rates * alter mint ordering * suppress value metrics * extend emergency pauses indefinitely Invariant conflicts resolve in favor of invariants. ### B.12 Emergency pause limitation invariant **Invariant** Emergency pause exists solely for catastrophic failures. * Maximum initial duration: 72 hours * Extensions: * require elevated multisignature approval * occur only in additional 72-hour increments Emergency pause is not a market-management tool. ### B.13 Mechanical liquidation invariant **Invariant** Liquidation, if triggered, is fully mechanical and pro-rata. * No discretionary prioritization * No governance intervention * Equal treatment per defined entitlement LSaaS partners liquidate via standard exit resolution. ### B.14 LSaaS isolation invariant **Invariant** LSaaS integrations are fully siloed. * Partner failure cannot compromise LSTEAK backing. * Core protocol pause enforces LSaaS pause. * LSaaS cannot consume LSteak backing in normal operation. Isolation boundaries are immutable. ### B.15 Invariant supremacy clause **Invariant** These invariants supersede: * user interfaces * documentation * governance proposals * integrations * market expectations Any contradiction resolves in favor of this section. ### Canonical lock statement “These invariants define LSteak. Violation of any invariant constitutes protocol failure.” *** Previous: [Section A — Definitions & Accounting Glossary](/lsteak-protocol-docs/technical-appendix/section-a-definitions-and-accounting-glossary.md)\ Next: [Section C — Deterministic System Flows](/lsteak-protocol-docs/technical-appendix/section-c-deterministic-system-flows.md) --- # Agent Instructions: Querying This Documentation If you need additional information that is not directly available in this page, you can query the documentation dynamically by asking a question. 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