Bonds
Dated positions that buy risk on purpose
Bonds are maturity-indexed positions across forty quarterly buckets to ten years. They carry the balance sheet's asset risk, pay Hazard for the capacity they use, and recover it through a Hurdle before profit is divided.
A Syncratix Bond is a dated, transferable position in the risk-bearing layer of the balance sheet, indexed to one of forty quarterly maturities extending to a ten-year horizon. It accepts deployed asset risk deliberately, pays the Hazard rate for the balance-sheet capacity it uses, and recovers that rate through a Hurdle applied to profit distribution.
The risk book is not funded by the liquid layer and then explained afterwards. It comes into existence when a holder stakes liquid kUSD into a dated Bond and thereby buys the risk at a defined maturity. That ordering is structural: the function that would expand the balance sheet without a buyer does not exist.
The term structure
Forty quarterly maturities to a ten-year horizon. A holder exchanges liquid kUSD for maturity-indexed shares, so duration is a decision rather than an accident, and the maturity structure feeds directly into the pricing of balance-sheet risk. The result is a term capital market rather than a single undifferentiated pool.
What a Bond pays, and what it recovers
A Bond pays the Hazard rate for the balance-sheet capacity it uses. It recovers that payment through a Hurdle applied to profit distribution at twice the Hazard paid, and surplus is divided above the Hurdle.
So the sequence is fixed: capacity is paid for, the payment is recovered before profit is shared, and only then is there a surplus to divide.
Where loss reaches it
After Equity. Losses are absorbed by the residual first, and reach the Bond book only where Equity cannot absorb them.
An absorbed loss is not written off. It accrues a preferential recovery claim, carried as a prior claim on subsequent profit. Those claims decay by half every cycle, which keeps the structure between two conventional extremes: a hard high water mark that can leave a position permanently underwater, and no mark at all, where past losses are simply forgotten. A recovery claim stays economically meaningful for the cycles immediately after the event that created it, and fades thereafter rather than accumulating into an overhang that no future performance can clear.
Exit
Bond positions are transferable, so a holder can exit through a secondary market rather than requiring redemption at the protocol before maturity. Liquidity in that market is a market outcome and not a protocol promise.