§ the invariant
ito has one law: for every state transition the contract permits, reserve′ / supply′ ≥ reserve / supply. the floor is not defended by a market maker, a treasury, or anyone's intention. it is checked by the hook at the end of every swap, mint, and burn, and any transaction that would violate it reverts. there is no admin key, no pause function, no upgrade path, no governance that could weaken the check. the invariant is the entire protocol.
floor(t) = R(t) / Q(t) R = ether held by the hook (the reserve) Q = circulating supply of ito invariant enforced on every state transition: R′ · Q ≥ R · Q′
§ how the floor rises
three flows feed it, and nothing drains it.
fees. a 0.3% fee in ether is taken on every swap through the pool and accrues to the reserve. supply is unchanged, so the floor rises. volume — any volume, in either direction, from anyone — ratchets the floor.
burns. any holder may redeem ito against the reserve at the floor price, less the fee. the redeemed tokens are destroyed. because the payout per token is below reserve-per-token after the fee, every burn leaves the survivors with a higher floor. sellers pay the holders on the way out.
mints. new ito is issued only when ether is deposited at a premium above the current floor. the premium stays in the reserve. every mint therefore weakly raises the floor; it can never dilute it.
burn of b tokens: payout = b · (R/Q) · (1 − φ) φ = 0.003 R′ = R − payout, Q′ = Q − b → floor′ > floor mint at premium μ over floor: price = (R/Q) · (1 + μ) tokens issued q = e · (1 − φ) / price R′ = R + e, Q′ = Q + q → floor′ ≥ floor
§ the ratchet
the mechanism is named for the pawl, the tooth in a ratchet that makes backward motion impossible. a ratchet does not know where it is going. it only knows it cannot go back. ito's floor has no target, no peg, no schedule. it is wherever accumulated volume, burns, and mint premiums have left it, and that number is the one thing about the token that is not a matter of opinion.
§ constraints against gaming
a single mint is capped at 5 ether, so no one can take a meaningful share of issuance in one transaction. burning in the same block as your last mint reverts, which makes flash-loan round trips uneconomic. the invariant check runs after fees settle, so there is no ordering of operations, no donation trick, no rounding path that lowers the floor — the contract compares the ratio before and after and refuses anything smaller. all arithmetic is PRBMath UD60x18 fixed point; rounding is always in the reserve's favor.
§ trading regimes
early, the mint is the only source of ito and the burn is the only exit; price discovery happens against the contract. mature, secondary pools become the venue: when the market trades above the mint premium, minting is profitable and supply grows; when the market bids below the floor, burning is profitable and supply shrinks until the gap closes. the floor is therefore also an arbitrage boundary — the market can trade anywhere above it, but every trip below it feeds the survivors. the contract always quotes. it does not run out of inventory until the reserve does, and the reserve, by construction, only leaves through the inverse door that raises the floor behind it.
§ no operator
we hold no allocation, no admin role, no fee switch, no upgrade path. the fee accrues to the reserve, not to us. there is nothing to extract from the hook except by burning ito through the floor like anybody else. if everyone who shipped this disappeared tonight, the contract would run tomorrow against the same rules and the same floor. that is what we mean by no operator. that is the only feature.