Equity
First loss, last in line, and gated on the way out
Equity absorbs loss before any other position and ranks last in a wind-down. It takes the residual economics and the Reserve accrual, and its distributions are gated by a threshold fixed before the cycle's outcome is known.
Equity is the junior position on a Syncratix balance sheet. It is not a tokenised claim. It absorbs first loss, ranks last in wind-down, receives the residual economics and the Reserve accrual, and may withdraw only the surplus above a minimum capital threshold fixed at the start of each cycle.
Equity is the position that makes the ranking above it meaningful. It stands ready to absorb the first loss on the risk book, and it ranks last when the estate is wound down.
It is not a tokenised claim. There is no Equity instrument to buy on a market; the seat is held by the party that capitalises and operates the instance.
What it receives
The residual economics of the structure and the Reserve accrual, subject to first-loss exposure, the distribution gate and the seniority constraints above it.
The distribution gate
Absorbing first loss does not imply that the holder of the seat may withdraw at will. A distribution gate separates distributable surplus from capital that must remain in the structure.
A minimum capital threshold is set at the start of each cycle. Only the excess above that threshold can be withdrawn, and then only subject to the state of the system at the point of withdrawal. Because the threshold is fixed before the cycle’s outcome is visible, it cannot be reassessed once the result is known.
The consequence is the one a committee asks about directly: Equity cannot defer a senior obligation in a cycle and extract its own capital in the same window.
Its discretion, and its boundary
The model recognises a defined Equity seat for discretionary decisions such as role appointment, rebalancing and wind-down. That discretion is bounded by the same accounting model as everything else. Quantities are measured from custody the model controls; only values are asserted, and they are asserted through the valuation process by a marking authority separated by design from the parties that allocate assets or write the ledger.
In a wind-down
Last. The Reserve is applied through the seniority order, the risky portfolio goes to auction-based price discovery rather than going-concern marks, Bond positions stay transferable, and Equity ranks behind all of it.