> For the complete documentation index, see [llms.txt](https://lsteak-protocol.gitbook.io/lsteak-protocol-docs/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://lsteak-protocol.gitbook.io/lsteak-protocol-docs/technical-appendix/section-c-deterministic-system-flows.md).

# Section C — Deterministic System Flows

**Version:** v1.0

### Deterministic system flows

This section defines deterministic execution flows for the LSteak protocol and all LSaaS subsystems.

All behavior here is subordinate to the immutable invariants defined in [Section B — Immutable Protocol Invariants](/lsteak-protocol-docs/technical-appendix/section-b-immutable-protocol-invariants.md).

No step in this section is discretionary.

Previous: [Section B — Immutable Protocol Invariants](/lsteak-protocol-docs/technical-appendix/section-b-immutable-protocol-invariants.md)\
Next: [Section D — Parameter Registry](/lsteak-protocol-docs/technical-appendix/section-d-parameter-registry.md)

### Contents

* [C.0 Global definitions & constants](#c0-global-definitions--constants)
* [C.1 External entry flow — user deposits into LSteak](#c1-external-entry-flow--user-deposits-into-lsteak)
* [C.2 Internal protocol action flow (no treasury cut)](#c2-internal-protocol-action-flow-no-treasury-cut)
* [C.3 Yield processing flow (LSteak Yield Engine)](#c3-yield-processing-flow-lsteak-yield-engine)
* [C.4 xl-LSTEAK redemption flow (contract-only)](#c4-xl-lsteak-redemption-flow-contract-only)
* [C.5 LSaaS entry pipeline (partner token → xl-Partner)](#c5-lsaas-entry-pipeline-partner-token--xl-partner)
* [C.6 LSaaS partner exit / failure resolution](#c6-lsaas-partner-exit--failure-resolution)
* [C.7 Emergency pause & liquidation](#c7-emergency-pause--liquidation)
* [C.8 Determinism guarantees](#c8-determinism-guarantees)

### C.0 Global definitions & constants

* **BPT (Backing Per Token)**: `Backing / Effective supply`
* **Treasury rate**: fixed, immutable `5%` wherever defined.
* **Price bands** (relative to BPT):
  * **Deadband**: market price within `±1%` of BPT
  * **Premium**: market price `> +1%` above BPT
  * **Discount**: market price `< −1%` below BPT

**Mint ordering (Invariant B.1)**

* Mint calculations reference the current BPT.
* Backing updates occur after mint.
* New BPT is then computed.

### C.1 External entry flow — user deposits into LSteak

{% stepper %}
{% step %}

### Input

User deposits value X.
{% endstep %}

{% step %}

### Treasury Allocation

* Treasury = 5% × X
* `Net_Input = 95% × X`

Treasury is removed before any allocation or minting logic.
{% endstep %}

{% step %}

### Mandatory allocation of `Net_Input`

`Net_Input` must be fully allocated and sum to 100% (of `Net_Input`).

Let:

* Bond allocation (`B_net`): `B_net ∈ [80%, 90%]` of `Net_Input`
* Hedge allocation (`H_net`): `H_net ∈ [5%, 15%]` of `Net_Input`
* Residual (`R_net`): `R_net = 100% − B_net − H_net`

Constraint: `B_net + H_net + R_net = 100%` (of `Net_Input`). Residual may be zero.
{% endstep %}

{% step %}

### Market Band Determination

Observe current market price P(LSTEAK) and compare to BPT.
{% endstep %}

{% step %}

### Deterministic Routing by Band

Deadband (±1%) — Action: Mint

* `Mint_Out = Net_Input / BPT`
* Transfer `Mint_Out` to user.

Premium (> +1%) — Action: Mint

* `Mint_Out = Net_Input / BPT`
* Transfer `Mint_Out` to user.

Discount (< −1%)

1. Use `Net_Input` to market-buy LSTEAK until price is restored as close as possible to BPT without overshooting into premium.
2. If `Net_Input` remains after buys:
   * Mint remainder at BPT:
     * `Mint_Out = Remaining / BPT`
3. User receives: `Buy_Out + Mint_Out`

Constraint: market buys may never overshoot parity.
{% endstep %}
{% endstepper %}

### C.2 Internal protocol action flow (no treasury cut)

{% stepper %}
{% step %}

### Input

Protocol spends value X (internal action).
{% endstep %}

{% step %}

### No Treasury Allocation

* `Net_X = X`

Treasury is not applied to internal protocol actions.
{% endstep %}

{% step %}

### Allocation Normalisation

Where allocations are defined on a 100% basis that includes a 5% treasury cut, allocations are renormalised to 95% for internal execution.

Given original parameters:

* Bonds = B%
* Hedge = H%
* Treasury = 5%

Net-basis weights are derived by dividing by the non-treasury basis (`95%`).

Effective execution weights:

* B′ = B / 95%
* H′ = H / 95%
* R′ = (100% − 5% − B − H) / 95%

Allocation bounds remain:

* Bonds: 80%–90% (basis-100%)
* Hedge: 5%–15% (basis-100%)
  {% endstep %}

{% step %}

### Band-Based Routing

Routing follows the same deadband / premium / discount logic as C.1, using `Net_X`.

Internal routing additionally applies:

* premium capture
* POL growth
* burn handling

exactly as defined in the invariant-compatible routing rules.
{% endstep %}
{% endstepper %}

### C.3 Yield processing flow (LSteak Yield Engine)

{% stepper %}
{% step %}

### Input

Realised yield Y.
{% endstep %}

{% step %}

### Treasury Allocation (Where Defined)

If the yield stream defines a treasury cut:

* Treasury = 5% × Y
* `Net_Y = 95% × Y`

Else:

* `Net_Y = Y`
  {% endstep %}

{% step %}

### Deterministic Allocation

`Net_Y` is allocated according to the locked slider ranges into:

* backing (BPT growth)
* xl-LSTEAK RR increase
* POL
* burns

All burns are irreversible.
{% endstep %}

{% step %}

### Backing Update

Backing is updated after allocation. BPT is recomputed.
{% endstep %}
{% endstepper %}

### C.4 xl-LSTEAK redemption flow (contract-only)

{% stepper %}
{% step %}

### Input

User redeems `xl_amount`.
{% endstep %}

{% step %}

### Compute output

* `Out = xl_amount × RR`
  {% endstep %}

{% step %}

### Burn

Burn `xl_amount`.
{% endstep %}

{% step %}

### Transfer

Transfer `Out` LSTEAK to the user.

RR may only decrease in liquidation scenarios.
{% endstep %}
{% endstepper %}

### C.5 LSaaS entry pipeline (partner token → xl-Partner)

{% stepper %}
{% step %}

### Input

Partner deposits `X` partner tokens.
{% endstep %}

{% step %}

### Compute RR (pre-deposit)

Compute partner RR using on-chain balances:

* `RR_pre = (Q + B) / S`
* `Q` = partner tokens in the VTL Queue
* `B` = partner tokens in xl backing
* `S` = total `xl-*` supply
  {% endstep %}

{% step %}

### Attempt VTL under immutable guardrails

Attempt to process some or all of `X` through the Value Transfer Loop (VTL).

VTL may execute only if:

* `LSTEAK_price >= 0.98 × BPT`
* the execution does not cause RR drawdown greater than `0.5%`

VTL execution is pre-simulated and atomic.

If constraints fail, the attempted VTL portion reverts.
{% endstep %}

{% step %}

### Queue any unprocessed portion

Any portion that cannot be processed through the VTL is deposited into the VTL Queue.

This deposit is not rejected due to guardrails.
{% endstep %}

{% step %}

### Deposit VTL output into xl backing

If a VTL executes, its resulting partner tokens are deposited into xl backing.
{% endstep %}

{% step %}

### Mint `xl-*` at `RR_pre`

Mint uses `RR_pre` and counts both:

* `X_backing` partner tokens added to xl backing via VTL, and
* `Q_added` partner tokens added to the Queue

Formula:

`xl_minted = (X_backing + Q_added) / RR_pre`
{% endstep %}
{% endstepper %}

#### Queue drip (LSaaS)

Every 10 minutes, the system attempts a VTL using tokens from the Queue.

Queue drip moves value from `Q → B` and does not mint `xl-*`.

`Q + B` stays constant, so RR stays unchanged.

### C.6 LSaaS partner exit / failure resolution

{% stepper %}
{% step %}

### Pause

Partner subsystem pauses.
{% endstep %}

{% step %}

### Resolution

* New partner deposits stop.
* Redemptions remain contract-only and deterministic.
* Redemption sources Queue first, then xl backing.
* No action may consume LSteak backing in normal operation.
  {% endstep %}
  {% endstepper %}

### C.7 Emergency pause & liquidation

{% stepper %}
{% step %}

### Emergency Pause

* Initial pause: ≤ 72 hours.
* Extensions: require elevated multisignature approval and occur in increments of ≤ 72 hours.
* Emergency pause halts all transactions.
* Purpose: assessment and liquidation only.
  {% endstep %}

{% step %}

### Liquidation

* Backing is liquidated deterministically.
* Distribution is pro-rata.
* No discretionary intervention.
* LSaaS liquidates via partner-exit mechanics.
  {% endstep %}
  {% endstepper %}

### C.8 Determinism guarantees

Across all flows:

* Treasury cuts are fixed at 5% wherever defined.
* Burns are irreversible.
* BPT and RR govern all decisions.
* Governance cannot override routing, ordering, or limits.

### Section C lock statement

“These flows define how the protocol executes. If behavior diverges from this section, the implementation is incorrect.”

***

Previous: [Section B — Immutable Protocol Invariants](/lsteak-protocol-docs/technical-appendix/section-b-immutable-protocol-invariants.md)\
Next: [Section D — Parameter Registry](/lsteak-protocol-docs/technical-appendix/section-d-parameter-registry.md)