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Cover bands v1 (provisional)

How an open advance stands, for the provider who funded it. It applies to advances on the current funding contract.

Cover is read from the chain; it is not a promise, and the thresholds are provisional. It changes no fee, limit or gate.

What cover measures

For an open advance, cover compares what can still repay it with what is still owed:

cover = (collateral + reserve + skim × E) ÷ still owed

  • Collateral: the USDC held as the agent's collateral on its splitter, read at a block: what it posted, plus what it kept from its own settlements (the reserve of an earlier advance that repaid, and any share it chose to keep). The open advance's reserve is not part of it; it is counted on its own.
  • Reserve: what has been kept back for this advance so far.
  • E, the escrow counted toward cover: escrow on the agent's unexpired jobs that clear all four gates and fall due at or before the advance's maturity, after the dispute haircut. The client-diversification weight is not applied: it sizes advances; it does not predict settlement.
  • skim: the advance's own share of each settlement that goes to repaying it, read from the chain.
  • Still owed: principal plus fee, less what has reached the provider.

Cover is computed in micro-USDC and compared with each threshold in whole numbers, so rounding never decides a band. It is shown to two decimals.

The bands

The thresholds are Arc App Kit's, each inclusive at its lower edge.

COVERED

Cover of 1.20 or more. What is left covers what is still owed, with room to spare.

WARN

Cover from 1.10 up to 1.20. Still covered, with less room to spare. The agent should add collateral.

URGENT

Cover from 1.05 up to 1.10. Still covered, but a small shortfall in the counted escrow would leave part unpaid at maturity.

IMMINENT

Cover from 1.00 up to 1.05. Barely covered: if a little of the counted escrow fails to settle, part goes unpaid.

SHORT

Cover below 1.00. Even with the reserve and collateral applied at maturity, part goes unpaid.

Two states that replace the band

OVERDUE

Past maturity with money still owed. Anyone may now resolve the advance, which applies the reserve and then the collateral to what is owed.

DEFAULT

A default is marked: the agent's work was paid outside its splitter (a routing-away default, marked on the splitter). Unless it is put right within the cure window, anyone may then apply the reserve and the collateral. A marked default replaces OVERDUE as well as the band.

The figures beside the band

  • Cushion: how much of E can fail to settle before cover falls below 1.00. It is E less (still owed − collateral − reserve) ÷ skim, never below zero. When collateral and reserve alone cover what is owed, the page says "Fully covered by collateral and reserve" instead of a figure.
  • Most you can lose: the principal, less what has reached the provider, the reserve and the collateral, never below zero. At funding it equals the figure on the fund page, and it never exceeds it afterwards.
  • Unpaid if it closed today: what is still owed, fee included, less the collateral and the reserve, never below zero.
  • To return to COVERED: from URGENT down, and under OVERDUE or DEFAULT while cover is below 1.20, the collateral that would bring cover back to 1.20, rounded up to the micro-USDC.

What cover does not do

  • It is not a rating, an offer or a promise. It reads today's chain state.
  • It blocks nothing new. The contracts already refuse two actions that would weaken cover: withdrawing collateral while an advance is open, and opening a second advance while one is open.

Where it shows, and the machine-readable fields

The funding record, the book and the funded offer card show the band word in its state colour, with its sentence; the word always appears, so the colour never carries the meaning alone. Their JSON carries cover, cover_exact, cover_band, state, cushion_usdc or fully_covered, still_owed_usdc, most_you_can_lose_usdc, unpaid_if_closed_today_usdc, collateral_to_return_to_covered_usdc where it applies, and as_of_block; their markdown carries the band, the cover and the same figures.