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12: Composed MYCO System

How Everything Fits Together

The MYCO bonding surface is a multi-channel token issuance system that combines financial reserve deposits with non-financial commitments, all managed through a unified reserve architecture.

Data Flow

Minting (Inflow)

User deposits ETH, USDC, DAI, ...
    │
    ▼
[Imbalance Fee Check]
    │ Fee applied if deposit skews reserve weights
    ▼
[Safety Check — Reserve Tranching]
    │ Blocked if deposit worsens weight deviation beyond threshold
    ▼
[N-D Ellipsoid Bonding Surface]
    │ Invariant r increases proportional to deposit value + geometry
    │ MYCO minted = supply * (r_new/r_old - 1)
    ▼
[Update Reserve State]
    │ Vault balances, total value, backing ratio
    ▼
$MYCO credited to depositor

Commitment Minting (Parallel Channels)

Labor attestation / Subscription payment / Staking lockup
    │
    ▼
[Rate Limit + Flow Dampening]
    │ Per-channel caps, cooldowns, exponential memory
    ▼
[Mint $MYCO]
    │ No invariant change (commitment-backed, not reserve-backed)
    │ Subscription payments DO add to reserve; labor/staking do NOT
    ▼
[Update Supply]
    │ Backing ratio decreases (more supply, same/slightly more reserve)
    ▼
$MYCO credited to contributor/subscriber/staker

Redemption (Outflow)

User burns $MYCO
    │
    ▼
[Flow Dampening]
    │ Exponential outflow memory → penalty multiplier
    │ Effective redemption = amount * penalty
    ▼
[P-AMM Redemption Curve]
    │ Rate depends on backing ratio:
    │   ba ≥ 1 → rate = 1.0 (par)
    │   ba < 1 → parabolic discount
    │   ba ≪ 1 → floor rate θ̄
    ▼
[Optimal Withdrawal Split]
    │ Withdraw more from overweight vaults → rebalance
    ▼
[Safety Check]
    │ Ensure withdrawal doesn't worsen vault deviations
    ▼
[Execute]
    │ Return USD-equivalent assets to user
    │ Burn $MYCO, shrink surface invariant
    ▼
Assets returned to redeemer

Parameter Governance

All parameters are governance-controlled. Key governance decisions:

Decision	Parameters	Effect
Reserve composition	Target weights, max deviation	Which assets and in what proportion
Surface geometry	λ_i, Q rotation	How concentrated pricing is per asset
Redemption safety	P-AMM α, θ̄, outflow memory	How aggressively to protect remaining holders
Fee structure	Static fee, surge rate, threshold	Economic incentives for balanced deposits
Commitment rates	Tokens per unit, rate limits, caps	How much non-financial contributions mint
Dynamic evolution	Weight schedules, oracle multipliers	How parameters change over time

Invariants (Things That Must Always Hold)

supply >= 0 — never negative supply
reserve_value >= 0 — never negative reserves
redemption_amount <= reserve_value — never return more than exists
sum(vault_weights) == 1.0 — weights always normalized
flow_tracker.current_flow >= 0 — flow tracking always non-negative
commitment_minted <= cap * supply — commitment channels capped

Simulation Scenarios

Three built-in scenarios test the system:

Token Launch: 50 depositors over 30 days, some redemptions at day 60-90
Bank Run: All holders try to redeem continuously — flow dampening protects
Mixed Issuance: Monthly financial deposits + weekly labor contributions over 1 year

Implementation

src/composed/myco_surface.py — Full system class (MycoSystem)
src/composed/simulator.py — Scenario runner and built-in scenarios

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