Deposit above the line.
Get paid to sit below it.
Plimsoll splits any ERC-4626 vault into two claims. The senior claim is paid first and capped. The junior claim absorbs the first loss and keeps everything left over. The market sets the price of the protection.
Whoever takes the fee never takes the loss. Plimsoll lets a curator put its own capital below the line — and lets everyone else see exactly how much is down there.
A ship’s load line marks how deep it may safely sit. Below the line is the junior’s capital, in rust. Losses eat it from the top down — the hatched band is protection already spent. When the rust runs out, the senior is under water.
Two claims, one vault
Both sides deposit the same vault shares. Only the order in which they are paid differs — and that order is the entire product.
Senior — above the line
Paid first, up to principal plus a fixed rate struck at the start of the epoch. It gives up the vault’s upside in exchange for sitting behind the junior tranche’s capital. A drawdown has to eat through all of that capital before the senior feels anything.
- Return
- Fixed, known at lock
- Downside
- Protected up to the attachment point
- Upside
- Capped
Junior — below the line
Takes the first loss, and is paid for it. It earns the whole pool’s return minus the senior’s coupon, on a base of only its own capital — which is leverage, in both directions. When the vault performs, the junior is where that performance lands.
- Return
- Levered residual
- Downside
- First loss, down to zero
- Upside
- Uncapped
The market sets the price of the protection
Nobody governs the senior rate into existence. Two mechanisms discover it.
Descending clock
The clock opens at a senior rate so generous that almost nobody wants the other side, then falls. A low senior rate is exactly what makes the junior side attractive, so protection arrives as the clock descends. The instant coverage hits its target the book freezes, and whatever the clock reads is the clearing price: the highest senior rate that attracted enough protection.
Utilisation curve
Read the market as a lending market and the shape is familiar: the junior borrows senior capital to lever itself, so utilisation is the senior share of the pool. Thin coverage is expensive coverage. The curve is gentle below the kink and bites above it.
How a series runs
- 01
Book opens
Both sides deposit vault shares and receive a freely transferable ERC-20 claim.
- 02
Price clears
Coverage reaches its target, the book freezes, and the senior rate is struck.
- 03
Epoch runs
Capital is locked and the vault does what it does. The claims trade anywhere.
- 04
Waterfall
At maturity the senior is paid up to its cap; the junior takes what is left.
Whoever takes the fee never takes the loss.
Plimsoll inverts that. Pick your side of the line and know exactly which one you are on.
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