Summary
This RFC proposes onboarding the Royco Dawn LP Program - Senior Vault as a new yield source for Lazy Summer Protocol. The Senior Vault offers a differentiated yield opportunity with 16.7% estimated APY and built-in principal protection through Royco’s innovative tranched structure.
Key highlights:
- Protected yield - Junior capital absorbs first 10-20% of losses before Senior capital is affected
- Differentiated yield source - This is an opportunity that is not open to all investors, and Lazy Summer would be getting preferential access.
- ROY token allocation - 0.5% of ROY tokens distributed pro rata to Senior Vault depositors
- Time-limited opportunity - Entry closes March 27, 2026 or at $50M capacity
Motivation
The Opportunity: Differentiated yield
The DeFi landscape continues to evolve with new yield sources offering competitive returns. The Royco Dawn Senior Vault represents a unique opportunity that differs from typical yield sources:
- Structural downside protection via Junior tranche buffer (10-20%)
- Managed diversification across multiple underlying markets
- Additional token incentives through ROY allocation
- Institutional-grade security with permissioned smart contracts
Why
Lazy Summer users across different risk profiles could benefit from this yield source:
- Lower Risk vault users may appreciate the principal protection mechanism
- Higher Risk vault users may value the competitive 16.7% APY
- DAO Managed vault could benefit from high APY with protection to off set some of the riskier allocations.
Specifications
| Field | Value |
|---|---|
| Protocol | Royco Dawn LP Program |
| Vault Type | Senior Vault |
| Token | USDC |
| Network | Ethereum Mainnet |
| Contract Address | TBD (Whitelist required for access) |
| Est. APY | 16.7% (7.5% base + 9.2% ROY tokens) |
| Protection Level | 10-20% Junior buffer |
| Minimum Deposit | $1,000,000 |
| Lockup | 90 days (for ROY allocation only) |
Yield Breakdown
| Component | Value | Notes |
|---|---|---|
| Base Yield (USDC) | 7.5% APY | Paid in USDC |
| Token APY (ROY) | 9.2% APY* | Based on current token valuation |
| Total Est. APY | 16.7% | Combined yield |
| ROY Allocation | 0.5% | Distributed pro rata to Senior depositors |
*Token APY subject to ROY token price fluctuations
Vault allocation breakdown
The Senior Vault diversifies across three underlying markets, each with dedicated Junior capital protection:
| Market | Protocol | Allocation | Est. Senior Yield | Protection |
|---|---|---|---|---|
| sNUSD | Neutrl | 28% | 8% | 10% |
| savUSD | Avant | 28% | 8% | 20% |
| PT-cUSD | Cap Finance | 29% | 7% | 10% |
Key Features:
- 0% first-loss exposure for Senior depositors
- Vault rebalances based on market conditions, Junior liquidity, and risk-adjusted returns
- All allocations displayed transparently on-chain
How it works
The Senior Vault uses a tranched structure where Junior capital acts as a protective buffer for Senior depositors. When losses occur in any underlying market, the Junior tranche absorbs the first 10-20% of those losses before Senior capital is affected.
This means Senior Vault depositors earn yield with downside protection, principal and yield are only impacted if losses exceed the Junior buffer in that specific market. Each of the three underlying markets (sNUSD, savUSD, PT-cUSD) has its own dedicated Junior capital providing this protection layer.
Security
| Attribute | Details |
|---|---|
| Backers | Electric Capital, Coinbase Ventures, Amber Group, Hashed |
| Access Control | Fully permissioned smart contracts |
| Security Audits | Hexens (completed), Cantina (pending) |
| Bug Bounty | Immunefi |
| Monitoring | Real-time monitoring systems |
| Code | Open-source |
| KYC | Required for all participants |
Terms
| Term | Details |
|---|---|
| Entry Window | January 26, 2026 - March 27, 2026 (60 days) |
| Program Capacity | $50,000,000 |
| Minimum Deposit | $1,000,000 |
| Principal Lockup | None - withdraw anytime |
| ROY Token Lockup | 90 days per deposit (forfeit ROY if withdrawn early) |
| ROY Vesting | Linear over 3 months post-TGE, no cliff |
| Eligibility | KYC required, accredited investor |
Entry closes when either:
- 3 months elapsed from program start, OR
- $50M TVL maintained for 1 month
Once entry closes, no new deposits can enter and ROY allocation is finalized with no further dilution.
Risk considerations
- 90-Day ROY Lockup - Withdrawing before 90 days forfeits ROY allocation for that deposit
- KYC Requirement - All participants must complete KYC and be accredited investors
- Smart Contract Risk - Standard DeFi risks apply despite audits
- Underlying Protocol Risk - Exposure to Neutrl, Avant, Cap Finance protocols
- Token Value Risk - ROY token value subject to market conditions
Questions for the community
Seeking feedback from SUMR token holders, Block Analitica, and the Lazy Summer community on the following:
Informal support indicator
Should Lazy Summer DAO proceed with onboarding Royco Dawn Senior Vault?
- Yes - Onboard as a new yield source
- No - Do not onboard at this time
- Abstain - Need more information
If approved, which Lazy Summer vault is most appropriate for this yield source?
- Lower Risk Vault - The protected yield structure aligns with conservative strategies *
- Higher Risk Vault - The 16.7% APY and token exposure fits higher risk appetite
- DAO Managed Vault - Let the DAO actively manage allocation to this source
- Multiple Vaults - Deploy across more than one vault type
Discussion points for @BlockAnalitica & community @chrisb @halaprix @Sixty @jensei
- Risk Assessment: Does the Junior tranche protection mechanism provide sufficient downside protection for Lower Risk vault inclusion?
- Allocation Size: Given the $50M program capacity and $1M minimum, what allocation would be appropriate for Lazy Summer?
- KYC Implications: What are the operational considerations for Lazy Summer DAO to complete KYC requirements?
- Token Exposure: How should the ROY token allocation be valued and distributed to vault depositors?
- Time Sensitivity: Entry closes March 27, 2026 - is this timeline feasible for governance process?