Investment Prospectus for the nStables Reserve

Investment Policy

The management of the assets of the Local Currency Fiat Reserve aims to achieve the best results by identifying and forming an investment portfolio with varying degrees of diversification and managing the associated risk, as advised by market circumstances at any given time. In its actions, the company shall adhere to standards of prudence and diligence of a good businessperson, solely for the benefit of the collective interests of the holders of the nStables. The company will make investments of the net assets of the Local Currency Fiat Reserve in financial instruments and negotiable securities, fixed income, public or private, with a public offering, issued and traded in countries where investment in securities in the local currency to which the nStables in question aims to achieve parity ("local country") is possible and denominated in said local currency ("local fiat currency").

Allowed Assets

Local currency nominated assets

The local currency nominated assets can be invested within the minimum and maximum percentages established as follows:

• From 0% to 100% of the local currency nominated net assets in:

  • Instruments issued by the Central Bank of the cocal country,

  • Debt instruments issued by the Federal/National Government of the local country,

  • Checking, savings or interests bearing accounts of locally regulated financial institutions,

  • Overnight stock market secured loans,

  • Locally regulated investment funds with settlement period up to 2 (two) days, which invest at least 80% of its portfolio in these assets or in fixed-term deposits issued by financial institutions authorized by the Central Bank of the local country

  • Same currency stablecoins with redeeming mechanisms to USD stablecoins or fiat.

• From 0% to 50% of the local currency nominated net assets in:

  • Fixed-term deposits issued by financial institutions authorized by the Central Bank of the "Local Country", provided that 20% (twenty percent) of the mentioned fixed-term deposits correspond to pre-cancelable fixed-term deposits that form part of the fund's liquidity margin.

Foreign Currency nominated assets

• From 0% to 100% of the foreign currency nominated net assets in:

  • Regulated ETFs composed of instruments issued by a Central Bank different from the "Local Country,"

  • Public debt securities issued by a National State different from the "Local Country," provided that this country is not banned by the Bermuda Monetary Authority or Local Financial Authority.

  • USDC and DAI USD Stablecoins

  • AAVE and Compound decentralized protocols USDC and DAI deposit certificates (aUSCC, cUSDC, aDAI, cDAI)

• From 0% to 100% of the foreign currency nominated net assets in:

  • Derivative transactions (only futures, forwards, warrants, negotiable securities representing call options or subscription options, always within the framework of public offering, swaps, and options), and always for exchange rate hedging purposes (reducing exposure to market risk) of positions in foreign currency.

Portfolio Duration

The duration of the fund shall not exceed 180 days under any circumstances. The calculation method used to determine the duration is as follows:

$$Duration(Portfolio) = \frac{\Sigma D_i V_i}{V}$$

Being $D_i$, the duration of each asset of the portfolio, $V_i$ the market value of each asset, and $V$ the total market value of the portfolio.

nStables Reserve buffer

To protect nStables holders from interest rate risk, the nStables Reserve is always overcollateralized. This over-collateralization acts as an equity buffer to absorb potential variations in the underlying asset values resulting from interest rate increases. The reserves buffer is sized using the calculation of VaR