Appendix B: Sky Agent Framework Primitives

Features and capabilities available to Sky Agents. Together with Appendix A (Protocol Features), this provides complete coverage of every mechanism in Sky.

Agent Types Overview

Sky Agents are created directly as their permanent type. Each agent type has specific capabilities, primitives, and governance structures. Agent types cannot be changed after creation.

Agent Type Hierarchy

Agent Subtypes

Agent types may have subtypes that define operational characteristics. Examples:

• Star Prime — Standard Prime operating under a Generator
• Institutional Prime — Serves institutional clients with higher compliance requirements

Common Agent Components

All agents share certain base components regardless of type.

SubProxy Account

On-chain treasury controlled by the Agent.

Agent Artifact

Governance documentation containing all rules, processes, and parameters.

Standard Artifact Structure:

Agent Artifact
├── Introduction (strategic overview)
├── Sky Primitives
│   ├── Genesis Primitives (Agent Creation, Token, etc.)
│   ├── Operational Primitives (Executor Accord, Root Edit, etc.)
│   └── Rewards Primitives (Distribution, Integration Boost, etc.)
└── Omni Documents
    ├── Governance Information
    ├── Strategic Intent
    ├── Ecosystem Accords
    └── Infrastructure Management

Agent Token

Native governance and reward token for the Agent.

Agent tokens enable decentralized governance and align stakeholder incentives. While all agent types can issue tokens, Halos may operate without one when functioning purely as investment wrappers under a Prime's umbrella.

Agent Token Issuance Fee

Every time an agent issues tokens — whether for team distribution, ecosystem incentives, fundraising rounds, or any other purpose — 5% of the issued amount goes to Sky Core. This applies to all agent types.

Agent Upkeep Fee

The upkeep fee is denominated in the agent's own tokens, eliminating the need for external price calculations. The agent simply pays 0.25% of their total token supply per year to Sky Core.

Upkeep Rebate System

Agents holding other agents' tokens can offset their own upkeep fees.

How Rebates Work:

When an agent holds another agent's tokens, they receive a rebate on their upkeep fee. The rebate calculation uses a conservative market price estimate for the held tokens, meaning the exchange rate spread benefits Sky. An agent can reduce their upkeep to zero through sufficient holdings, but cannot earn a "negative" upkeep (i.e., rebates don't become income).

Agent Staking Rewards

Distribute rewards to agent token stakers.

Agent Token Buyback

Use agent revenue for token buyback.

Root Edit Primitive

Token holders modify Agent Artifacts.

Agent Spells

On-chain execution mechanism for Agent governance decisions.

Current Behavior: Agent Spells are used for most modifications that Primes and Halos make to their on-chain state — deploying new instances, updating parameters, and executing governance decisions.

Post-Laniakea Behavior:

• Prime Spells — Cannot modify Prime's own state (locked down by Laniakea factory); only used to trigger Halo Spells
• Halo Spells — Continue to perform arbitrary changes; Halos can have arbitrary complexity and technical scope

This separation ensures Primes operate within standardized, factory-defined constraints while Halos retain flexibility for diverse investment strategies.

Executor Accord Primitive

Framework for executor relationships.

Facilitator Framework

Interpret Atlas/Artifacts on behalf of Executors.

Key Principle: Spirit of the Atlas

• All rules have underlying intent to serve human values
• Facilitators interpret Spirit when explicit guidance is absent
• Balance between "letter of the rule" and true purpose

Prime Agents

Prime Agents are the highest tier of capital-deploying agents in Sky Ecosystem. They deploy capital at scale, create Halos, and manage risk capital.

Prime Creation

What Gets Created:

• Agent identity in the Synome
• SubProxy Account (on-chain treasury)
• Prime Agent Artifact
• Foundation structure (legal entity)
• Agent Token (10B genesis supply)

Current Prime Agents

Prime SubProxy addresses live in Appendix E (appendix-e-infrastructure.md).

Prime Capital Deployment

Allocation System

Deploy capital into approved strategies via PAU pattern.

How It Works:

1. Prime governance approves strategies via Init System
2. GovOps instantiates approved configurations
3. Sentinels execute operations within rate limits
4. Capital flows through Controller → ALMProxy → Target

PAU (Parallelized Allocation Unit)

Standard building block for all capital deployment.

Key Principle: Same contracts, different configuration. All layers use identical PAU patterns with layer-specific parameters.

Rate Limit System

Bounded capital movement velocity with linear replenishment.

Rate Limit Types (per chain):

SORL (Second-Order Rate Limit)

Constraint on rate limit increase speed.

Purpose:

• Prevent sudden capacity expansion attacks
• Enable emergency decreases without delay
• Give monitoring time to detect anomalies

Prime Risk Capital

Internal JRC (IJRC)

Prime's own junior risk capital; foundation of risk capacity.

Tip JRC (First Loss Capital):

TEJRC Tokenization

External parties provide JRC via smart contract.

Note: Yield and queue rate formulas are currently experimental and will be standardized over time.

Flow:

1. External party deposits capital to TEJRC queue
2. Capital converts at settlement based on available capacity
3. TEJRC tokens represent junior risk capital position
4. Earns yield; absorbs losses after Tip JRC is depleted

TISRC Tokenization

Tokenized isolated senior risk capital per Prime.

Note: Yield and queue rate formulas are currently experimental and will be standardized over time.

Prime Loss Absorption Waterfall

When a Prime experiences losses, capital is consumed in strict order:

Loss Event
    ↓
┌─────────────────────────────────────┐
│  1. Tip JRC (10% of IJRC)           │  ← Absolute first loss
├─────────────────────────────────────┤
│  2. IJRC + EJRC (pro-rata)          │  ← Remaining junior capital
├─────────────────────────────────────┤
│  3. Agent Token Inflation           │  ← Dilute token holders to cover
├─────────────────────────────────────┤
│  4. TISRC                           │  ← Prime-isolated senior capital
├─────────────────────────────────────┤
│  5. Global SRC (srUSDS)             │  ← System-wide senior capital
└─────────────────────────────────────┘

Prime Rewards & Incentives

Distribution Rewards

Token rewards to incentivize USDS/sUSDS adoption through tagging. Rewards are tiered based on how strongly the distribution channel builds long-term demand-side moat.

Distribution Reward Tiers:

Tier 2 — Unbranded Complex Products (10 bps):

• Product does not use "USDS" in name
• Backed by mixed collateral with <90% sUSDS
• Example: "StarUSD" containing various stablecoins as collateral

Tier 3 — Branded or High-Backing Products (20 bps):

Two paths qualify for Tier 3:

Tier 4 — Boosted Distribution Rewards (50 bps):

• Direct holding of USDS or sUSDS
• Clear Sky branding in the frontend
• Creates strongest demand-side moat

Tagging Mechanism:

Tagging associates a USDS/sUSDS balance with a Star for Distribution Reward purposes.

Tag Ownership Rules:

Note: Tag ownership rules (last-tagger-wins) are not yet finalized and may change.

Liability Duration Rewards

Rewards for Primes that source tagged USDS demand feeding into the SPTP (Stablecoin Principal Term Profile) system.

How It Works:

1. USDS accounts accrue liability duration over time and are placed in SPTP buckets based on their duration profile
2. Primes tag USDS accounts, giving them a proportional "share" of each bucket's underlying demand
3. When a Prime pays fees to reserve capacity, their reservation "tugs" on buckets to match their duration needs
4. Fees flow back to whoever tagged the USDS that actually gets tugged

Dynamic Matching:

Bucket contents change over time as USDS accounts accrue or lose duration. When a Prime reserves capacity:

• They may tug on nearby buckets if their target bucket lacks sufficient capacity
• Fee distribution follows the actual tugging, not the original reservation target
• This ensures rewards always flow to Primes whose tagged demand is actually being matched

Fee Distribution:

For each bucket that gets tugged, fees are distributed proportionally:

• If Prime A tagged 30% of a bucket's USDS, Prime A receives 30% of the fees from tugs on that bucket
• The split multiplier (initially 2/3) is then applied, with the remainder going to Sky

Example:

• Prime B reserves capacity targeting Bucket 42, but tugs Buckets 41-43 based on availability
• Bucket 42 contains $100M of USDS; Prime A has tagged $30M (30%)
• Of the $1M fees Prime B pays, $400K is attributed to Bucket 42
• Prime A receives: 30% × (2/3) × $400K = $80K from Bucket 42
• (Plus any share from Buckets 41 and 43 if Prime A tagged demand there)

Even Tier 1 (0 bps DR) tagged addresses can earn Liability Duration Rewards, allowing Primes to benefit from demand-side contributions without requiring full branding or composition requirements.

Integration Boost

Mechanism to apply SSR yield to naked USDS held in smart contracts without using sUSDS.

How It Works:

Integration Boost is essentially a manual way of having USDS earn the SSR without converting to sUSDS. This is useful for:

• Protocols that need to hold raw USDS (e.g., for liquidity or specific contract logic)
• Integrations where wrapping/unwrapping sUSDS adds friction or gas costs
• Smart contracts that cannot easily integrate ERC-4626 vaults

The yield is paid out to the smart contract holding the USDS, which can then distribute it according to its own logic.

Governance Access Reward

Rewards for Primes providing compliant governance frontends.

Note: Specific compliance requirements for frontends are TBD.

Prime: SPTP Capacity Reservation (Planned)

Acquire duration-matching capacity via auctions.

101 SPTP Buckets:

• Each bucket = 0.5 months (15 days)
• Bucket 0 = immediate liquidity
• Bucket 84 = 42 months (JAAA CLO AAA)
• Bucket 100 = 50+ months (structural/permanent)

Prime: Pioneer System (Genesis Stars Only)

The Pioneer System enables Stars to gain exclusive advantages when expanding USDS to new blockchains. This primitive is only available to the 5 genesis Stars.

Pioneer Chains and Pioneer Stars

A Pioneer Chain is any blockchain integrating USDS for the first time. A Pioneer Star is the Star designated by the chain's team/foundation to lead the USDS rollout.

Designation Process:

1. Written confirmation from Pioneer Chain's official team/foundation
2. Star's governance verifies intention to accept Pioneer Status
3. Core Council reviews strategic alignment with Sky Ecosystem growth
4. If approved, Pioneer Phase (3 years of exclusive benefits) begins

Pioneer Phase Benefits

1. Distribution Reward Tagging

2. Pioneer Rewards

"Unrewarded USDS" = bridged USDS not earning SSR through sUSDS, Integration Boost, or Agent holdings.

3. Unbalanced Supply Fee Authority

The Pioneer Star can charge fees to other Stars that allocate supply without contributing to demand.

Balancing Mechanisms (to avoid fee):

Exemptions: Pioneer Star or Pioneer Chain team can grant exemptions via Ecosystem Accord. Exemption terms cannot be revoked if the exempted Star made significant investments based on them.

De-designation

If the Pioneer Star fails to meet expectations recorded in an Ecosystem Accord, the Pioneer Chain team/foundation can:

• De-designate the Pioneer Star, or
• Transfer designation to a different Star

When de-designated, the 3-year clock pauses. A future Pioneer Star continues from where the previous one stopped.

Halo Agents

Halo Agents are lighter investment products created by Primes. They wrap specific strategies and use LCTS for capacity-constrained operations.

Halo Types

Standard Halos are the most common type and can be configured for any investment strategy or operational purpose. They support multiple Halo Units within a single Halo structure.

Identity Network Halos and Exchange Halos are specialized types with additional regulatory requirements, tied to the Identity Network and Sky Intents systems respectively. See identity-network.md and sky-intents.md for details.

Halo Creation

Halo Unit Structure

Individual investment product within a Standard Halo.

Generator Agents

Generator Agents issue Sky Generated Assets (SGAs) — stablecoins for currencies beyond USD. Currently, there is one implicit Generator for USDS; future Generators will issue other currencies.

Note: Generator creation process and detailed specifications are TBD.

Generators have a limited set of specific primitives available to them:

Issue Generated Asset

Issue Global Senior Risk Token

Issue Fixed Rate Tokens

Set Distribution Rewards

Set Sticky Demand Rewards

Executor Agents

Executor Agents operate systems with collateral backing. They execute day-to-day operations and provide oversight within the Sky governance framework.

Executor Types

Operational Executor

Core Executor

This appendix should be updated as new primitives are deployed.