Network Security and Economic Incentives
Reya’s security model anchors sequencing to Ethereum and uses the REYA token to align incentives for the mechanisms that keep the network live and neutral:
The Insurance Fund serves as a risk buffer to maintain protocol solvency
The Assistance Fund (AF) serves as the policy module for REYA and ETH buybacks
sReya holders stake REYA to delegate execution rights to execution node operators
Ethereum validators re-stake ETH to delegate sequencing to execution node operators
Insurance fund serves as a risk reserve to maintain protocol solvency during adverse market conditions, with governance-defined rules for deployment and replenishment priorities. It is also capitalised through a governance-set allocation from trading fees, liquidation fees, and RLP staking yield.
Assistance Fund (AF) receives a governance set allocation from trading fees, liquidation fees, and yield generated by RLP. The AF executes open-market purchases targeting an 80% REYA, 20% ETH split by mark-to-market value at the time of purchase. In this setup, governance is responsible for defining the execution cadence and safeguards around the buybacks (e.g. TWAP windows). Governance is also responsible for deciding when the AF should start receiving fees, with the option to keep sharing fees with front-ends and RLP to accelerate growth in the early stages of Reya. Additionally, governance may elect to enable distributions from the AF to network participants in the future.
REYA stakers stake REYA on Ethereum mainnet, thereby delegating execution responsibilities to an execution node operator of their choice. They are incentivised through:
REYA distributions
Trading fee discounts
Governance rights proportional to their stake
The ability to use sREYA as trading collateral, in the medium term
It is important to note that the REYA stakers earn yield in REYA terms, and their realized yield is a function of network activity as well as the TVL of the staking contract.
Ethereum validators need to re-stake their ETH to delegate sequencing to execution node operators according to the based lookahead schedule governing the execution node rotation. They are incentivised through:
REYA distributions
Correlated penalties between Reya stakers and Ethereum validators are defined and enforced on Ethereum, reinforcing careful operator selection and neutral, reliable sequencing.
This design grounds Reya’s security directly to Ethereum while ensuring that value created through trading and RLP staking flows back into the Reya ecosystem.
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