Principal Repayment

Debt instruments repay the principal according to the repayment schedule.

The principal MUST be repaid according to a principal repayment schedule.

If the D-ASA has coupons, the principal MUST NOT be paid if there is any due coupon still to be paid.

In the case of an on-chain payment agent, the D-ASA MUST repay the principal to the Lander’s Payment Addresses.

Bullet Schedule

If the principal repayment schedule is bullet, the principal MUST be paid entirely at the maturity date using the pay_principal method.

Amortizing Schedule

If principal repayment schedule is amortizing, the D-ASA MUST define the amortization rates as uint16[] array, where:

  • The length of the array is N=K+1, with K equal to the total coupons;

  • The first Kelements of the array are the amortizing rates associated with coupon payments;

  • The last element of the array is the amortization rate associated with principal payment;

  • The elements of the array are expressed in basis points (bps);

  • The sum of all the amortization rates is equal to 10,000 bps.

📎 EXAMPLE

A D-ASA with 5 coupons and even principal amortizing rates has the following amortizing rates (bps):

uint64[] = [2000, 2000, 2000, 2000, 2000, 0]

📎 EXAMPLE

A D-ASA with 5 coupons and a single principal early repayment of 50% has the following amortizing rates (bps):

uint64[] = [0, 0, 5000, 0, 0, 5000]

📎 EXAMPLE

A D-ASA with 4 coupons and different principal amortizing rates (bps):

uint64[] = [1000, 2000, 3000, 4000, 0]

📎 EXAMPLE

The following are invalid amortizing rates, since their sum is not equal to 10,000 bps:

uint64[] = [1000, 2000, 3000, 4000, 5000]

The amortizing rates MUST be set using the OPTIONAL set_amortizing_rates method.

The amortizing rates MAY be updated with the OPTIONAL set_amortizing_rates method.

The updated amortizing rates MUST NOT modify past amortizing rates.

The principal MUST be repaid along with coupons, according to the amortizing rates, using the pay_coupon method.

The D-ASA unit value MUST be updated according to the outstanding principal.

A reference implementation SHOULD restrict the amortizing rates updatability.

📎 EXAMPLE

Let’s have a D-ASA denominated in EUR, with a principal of 1M EUR and a minimum denomination of 1,000 EUR, 5 coupons, and an even amortizing schedule (20% amortizing rate). The D-ASA has 1,000 total units. The D-ASA initial unit value is 1,000 EUR. The 1st coupon pays both the interest (according to the coupon rates) and 20% of the principal (according to amortizing rates). The D-ASA outstanding principal is 800k EUR. The D-ASA unit value is 800 EUR.

📎 EXAMPLE

Let’s have a D-ASA denominated in EUR, with a principal of 1M EUR and a minimum denomination of 1,000 EUR. The D-ASA originally had 1,000 total units (worth 1,000 EUR each) in circulation. A partial repayment of 500k EUR (50% of the original principal) must be executed pro rata to all lenders. A single amortizing rate of 5,000 bps is used. After the partial repayment, the D-ASA still has 1000 circulating units (worth 500 EUR each).