# Margarita Finance FAQ ## Common Questions Answered Everything you need to know about our yield products, strategy, legal structure, and how your funds are managed. ### Product
What is Margarita Finance and what products do you offer? Margarita Finance is a DeFi-native structured products platform that makes institutional-grade yield strategies accessible on-chain. We operate two product lines: **Protocol v1** — a permissioned app ([app.margarita.finance](https://app.margarita.finance/)) for KYC'd qualified investors to generate on-demand, legally-enforceable structured products (barrier reverse convertibles / yield boosters) directly with institutional market makers like STS Digital. Each product is issued as a unique SPL token on Solana, with all terms immutably recorded on-chain and priced via the Pyth oracle. Over $6M in primary issuance volume since launch. **Protocol v2 — x20 Yieldcoins** — tokenized yield products (NEAR20, SOL20) that package a continuously managed short-volatility options strategy into a single on-chain token, issued by a Luxembourg SPV managed by an FCA-regulated portfolio manager. Accessible via our app (KYC'd minting) or permissionlessly via DEX pools (Raydium, RHEA Finance).
What exactly is SOL20 and what are its key parameters? SOL20 is a tokenized option strategy issued by **Verified SV Sàrl** (Luxembourg), managed by an FCA-regulated portfolio manager. USDC deposits are invested into a revolving portfolio of 1-week ATM covered puts (knock-in barrier options) on SOL/USDC, with daily rebalancing across multiple Tier 1 market makers. The SOL20 token price rises as option premia accrue into the NAV. | Parameter | Value | | ------------------- | ------------- | | Target APY | 15–20% | | Initial Price | 1.00 USDC | | Investment Currency | USDC | | Blockchain | Solana | | Redemptions | Daily (1/7th) | | Full Liquidity | Within 1 week | | Management Fee | 2% p.a. | | Performance Fee | 20%\* | \*Performance fee applies above SOFR + high watermark only — ensuring fees are charged solely on returns exceeding the risk-free rate, and only when the NAV exceeds a prior peak.
Where can I buy SOL20 and NEAR20? **Primary market (KYC'd):** Minting directly with the SPV is available via [app.margarita.finance](https://app.margarita.finance/) for verified, onboarded investors. **Secondary market (permissionless):** SOL20 will be listed on **Raydium DEX** on Solana. NEAR20 is **live now on** [**RHEA Finance**](https://rhea.finance/) on NEAR Protocol — no KYC required. {% hint style="info" %} The primary market token and the DEX token are the same. Institutional seed investors mint via the SPV and supply that liquidity to the permissionless DEX pool. {% endhint %}
Can I redeem my SOL20 at any time? Yes. SOL20 offers **daily redemptions of up to 1/7th of your position**, enabling full liquidation within one week. This schedule aligns with the 1-week tenor of the underlying option trades — positions are redeemed as the weekly options naturally mature. Alternatively, SOL20 tokens can be sold at any time on Raydium at the prevailing market price, subject to available DEX liquidity.
What fees do you charge? **Protocol v1 (on-demand trades):** A spread on the yield booster is charged at execution. The yield shown already reflects this spread. **x20 Yieldcoins:** 2% annual management fee and 20% performance fee above SOFR + high watermark. These are market-comparable to institutional short-volatility hedge fund fee structures and cover the FCA-regulated portfolio manager, the Luxembourg SPV, legal/compliance infrastructure, and best-execution quoting across multiple Tier 1 market makers. There are no hidden fees. {% hint style="info" %} The high watermark ensures performance fees are never charged twice on the same NAV gains. If the portfolio declines and then recovers, fees only resume once the prior NAV peak is exceeded. {% endhint %}
### Strategy & Yield
How is yield generated? Yield is generated by running a **short-volatility options strategy** — daily rebalancing into weekly ATM knock-in put options (barrier reverse convertibles) on SOL/USDC or NEAR/USDC. Every day, 20% of the NAV is deployed into a fresh 1-week option trade. The FCA-regulated portfolio manager (Verified Assets Limited) requests competitive quotes from multiple Tier 1 market makers — including STS Digital, GSR, and others — and selects the best execution. The option premium collected accrues into the token price, growing the NAV over time. The revolving structure (different strikes, barriers, and entry points each day) diversifies timing risk. In high-volatility environments, implied volatility rises, which tends to increase the option premium available — creating a partial natural hedge against drawdown periods. Crypto is particularly well-suited to this strategy as implied volatility tends to be high relative to other asset classes.
What is a Barrier Reverse Convertible (DCI) and what are the payoff mechanics? A Barrier Reverse Convertible (BRC), also known as a Dual Currency Investment (DCI) with a European knock-in barrier, or a "yield booster", is a structured product where the investor collects an upfront option premium in exchange for accepting conditional downside exposure to the underlying asset if it ends below a set barrier at maturity. **Payoff at maturity — European barrier, observed only once at expiry:** * **If SOL ends above the barrier at maturity:** Investor receives full notional in USDC + yield. ✅ * **If SOL ends at or below the barrier at maturity:** Investor receives the notional in SOL, valued at the initial fixing level (the at-the-money spot price at trade entry) + yield. ⚠️ This is **physical settlement**: when a barrier is hit, the investor receives SOL at the price prevailing when the trade was opened — not the current (lower) spot price. In this scenario, the investor still receives the yield in all cases. The result is equivalent to having purchased SOL at the original entry price, cushioned by the premium collected. These are **investor products with no leverage and no margin calls.** The maximum loss is limited to the invested capital (plus counterparty credit risk). As seen from the Protocol v1 app interface, each trade clearly shows both payout scenarios visually before execution, together with the downloadable term sheet and legal documentation. {% hint style="info" %} The barrier is European — observed only once, at maturity. Intra-week price drops below the barrier do not trigger the knock-in. Only the closing price at the final fixing date matters. {% endhint %}
Can you guarantee the 15–20% target APY? **No. Returns are never guaranteed.** The 15–20% is a target calibrated across full market cycles. Actual realised returns depend on market conditions, implied volatility levels, and barrier hit frequency. During sharp SOL drawdowns, the strategy will underperform its target — though the premium collected each week provides a meaningful cushion relative to holding the underlying asset outright. Risk is managed through daily rebalancing across different strikes and entry points, short 1-week tenors to limit directional exposure, competitive multi-dealer execution, and dynamic barrier calibration in high-volatility environments. Lower-yield configurations (e.g. targeting \~10% APY) can be calibrated with lower barriers and smaller drawdowns for more risk-averse investors.
How does Protocol v1 differ from x20 Yieldcoins? The underlying economics (barrier reverse convertibles on crypto underlyings) are the same. The structure and access differ: **Protocol v1:** Bilateral OTC contract between the investor and a market maker (e.g. STS Digital), executed and settled fully on-chain. The investor selects parameters, receives a real-time quote, and signs the trade — issued as a unique SPL token on Solana with all terms recorded in the smart contract. Physical settlement at maturity via the Pyth oracle. Contractual relationship is directly with the market maker; Margarita Finance acts as the neutral platform facilitating the RfQ, documentation, and lifecycle management. **x20 Yieldcoins:** Pooled fund structure. Investors hold a single fungible token (SOL20) whose price reflects the growing NAV of the Luxembourg SPV. The FCA-regulated portfolio manager runs the strategy, diversifying across multiple market makers and rebalancing daily. No fixed maturity; yield accrues continuously into the token price. Enables permissionless DEX access and best-execution across 3+ market makers per trade cycle.
### Legal & Structure
Who manages the funds and what is the legal structure? The legal structure for SOL20 is as follows: * **Issuer:** Verified SV Sàrl (Luxembourg) — bankruptcy-remote SPV compartment. * **Portfolio Manager & Calculation Agent:** Verified Assets Limited (Company No. 15681826), 128 City Road, London EC1V 2NX, United Kingdom — FCA-regulated. Independently executes trades, selects counterparties, and calculates the NAV. Both roles held by the same independent entity. * **Product Sponsor:** Margarita Finance Technology Ltd. (No. OI-423981), Grand Cayman, Cayman Islands — provides strategy parameters, tokenization infrastructure, and investor platform. Has no discretion over trade execution, counterparty selection, or NAV calculation. * **Custody:** Fireblocks institutional custody. * **Applicable Law:** Swiss law (excluding CISG). Arbitration in Zurich under Swiss Rules of International Arbitration. This role separation is formally established and constitutes the primary structural investor protection.
Who can invest? What are the eligibility requirements? **Protocol v1 (primary minting):** Restricted to professional/qualified investors — individuals with $1M+ net worth or $200k+ annual income, or entities with $5M+ total assets — who have completed KYC onboarding via the Margarita platform. US persons are excluded under Regulation S. Governed by the Structured Products Master Agreement under Swiss law. **x20 Yieldcoins on DEX:** SOL20 on Raydium and NEAR20 on RHEA Finance are permissionlessly accessible without KYC, as secondary DEX trading falls outside the primary subscription framework. Applicable retail suitability rules vary by jurisdiction and remain the investor's own responsibility. Governed under Swiss law and the Swiss DLT Act. Obligate AG, our parent entity, has issued over $200M of on-chain native securities to institutional investors globally.
What is Margarita Finance's corporate background? Margarita Finance is a Cayman foundation. The application is operated by Obligate AG, a Swiss fintech company based in Zurich specialising in on-chain capital markets infrastructure. Margarita Finance raised over $1M in pre-seed funding in December 2024. [Read the announcement →](https://apnews.com/press-release/ein-presswire-newsmatics/near-foundation-and-margarita-finance-launch-near20-institutional-grade-agentic-yield-token-02d7f1bfa3cee78a9ce0c71623b8d772)
### Security
Have your smart contracts been audited? Protocol v1 smart contracts were audited by **Hacken** (September 2024). The audit report is available upon request. The x20 tokens (Protocol v2) use the standard **SPL Token program** and **Metaplex Token Metadata program** without modification — both independently audited by their respective organisations and widely used across the Solana ecosystem.
How are investor assets held and protected? Assets in the x20 SPV are held in **Fireblocks institutional custody** under the management of Verified Assets Limited. The Luxembourg SPV compartment is **bankruptcy-remote** — investor assets are legally ring-fenced from Margarita Finance's corporate balance sheet. Even if Margarita Finance ceased operations, SPV assets remain protected. For Protocol v1 trades, the investment amount is transferred to the market maker (Providing Party) at inception. At maturity, the market maker funds the Product Smart Contract with the redemption amount — calculated automatically by the smart contract based on the Pyth oracle price feed — which is then released to the investor's wallet with no manual intervention required.
Is AI used to make investment decisions? **No. AI is not used in investment decision-making** or in any regulated portfolio management activity. The determination of optimal strikes, barriers, and tenors is made by Verified Assets Limited (FCA-regulated portfolio manager) in partnership with Allasso, a firm specialising in quantitative options strategies. AI is used to automate operational workflows — requesting quotes from market makers, issuing on-chain products, and interacting with counterparties that support API-based quoting. Some market makers still quote via Telegram, meaning human judgment remains in the loop for those interactions. We are progressively expanding agentic workflows as market maker API infrastructure matures. {% hint style="info" %} References to "AI-managed yield strategy" or "agentic workflows" in our materials refer to this operational automation layer — not autonomous investment decision-making. {% endhint %}
How can I track the NAV and performance of SOL20 or NEAR20? SOL20 and NEAR20 token prices reflect the NAV reported daily by Verified Assets Limited (the FCA-regulated portfolio manager). A **NAV price feed** is available via the app UI and API. On-chain, the NEAR20 contract is publicly verifiable at [nearblocks.io](https://nearblocks.io/address/near20.margaritafinance.near). NEAR20 is live and tradeable on [RHEA Finance](https://rhea.finance/).
Still have questions? We're happy to walk you through the product in detail. [Book a call →](https://calendly.com/vitapur)