Protocol Mechanics

Creek Protocol operates through four integrated mechanisms that collectively form a comprehensive, capital-efficient DeFi ecosystem for gold-backed assets. The following high-level overview outlines these core mechanisms.

The term 'Gold Token' specifically refers to blockchain-based gold tokens collateralized by one troy ounce of physical gold held in custody, including but not limited to XAUm tokens.

Gold Token Staking Lifecycle

The Gold Token staking lifecycle forms the foundational infrastructure of Creek Protocol, facilitating the transformation and bifurcation of physical gold's value into discrete digital assets:

• Users stake XAUm tokens (gold-backed tokens issued by Martixdock representing one troy ounce of physical gold)

• The protocol immediately mints 100 GY and 100 GR tokens to the staker, representing gold's volatility value (vValue) and stable value (sValue) respectively

• Redemption of XAUm requires concurrent submission of the corresponding 100 GY and 100 GR tokens, which the protocol burns before releasing the original XAUm

• This mechanism ensures each GY and GR token in circulation maintains a verifiable link to physical gold reserves, establishing a complete value chain

This architecture enables precise value decomposition, allowing users to configure exposure profiles according to individual risk preferences through composable token instruments.

Stablecoin Issuance Framework

The GUSD stablecoin issuance framework unlocks liquidity from gold assets while maintaining a 1:1 USD peg through multi-layered stability mechanisms:

• GR tokens function as primary collateral for minting GUSD, with an initial collateralization ratio of 85%

• Tiered risk management protocol incorporates health factor monitoring (120%-105%) and dual-stage liquidation processes

• Whitelisted assets (e.g., USDC) can also mint GUSD with a 0.1% minting fee, subject to protocol reserve constraints

The GUSD stablecoin provides the ecosystem with a stable medium of exchange while enabling users to maintain gold price exposure with optimized capital efficiency.

Yield Distribution Architecture

The yield distribution architecture implements a transparent, equitable value-sharing system that creates positive incentive alignment:

• Revenue streams include stability fees, GY trading fees, liquidation penalties, and auxiliary service revenues

• Unified distribution model: 35% allocated to GY holders, 35% to GUSD LPs, 15% to Insurance Fund, 15% to team multi-signature wallet

• Distribution processes execute daily with zero minimum claim threshold and optional auto-compounding functionality

• Insurance Fund receives dedicated portion of protocol revenue while supporting emergency backstop functions

This mechanism ensures all ecosystem participants become stakeholders in protocol revenue, creating a balanced and sustainable financial ecosystem.

Through these four interconnected core mechanisms, Creek Protocol achieves efficient utilization of gold assets, offering users flexible participation methods while maintaining system security and stability through multiple risk management layers and transparent economic incentives.