The Grove
The Grove is the programmable yield architecture of 3.Finance — a dual-purpose asset layer where both protocol-held Treasury assets and user deposits operate within identical mechanical frameworks to generate yield.
Dual-Purpose Asset Layer
The Grove serves two constituencies through one unified engine. Protocol-held Treasury assets (PHA) — yield-generating derivatives — fuel system revenue through harvest cycles. Meanwhile, user deposits earn yield through the same strategies without participating in harvest cycles.
Both operate within identical frameworks — the same signal system, the same balance mechanics, the same composability tools. The only difference is destination: protocol revenue flows to the Distribution Engine, while user yield flows back to the depositor.
Protocol Treasury Assets
- Yield-generating derivatives fuel system revenue
- Harvest Cycles convert accumulated yield to crvUSD
- Revenue flows to Distribution Engine → PODs
- PHA backs 3Fi (governance equity)
User Deposits
- Same yield strategies as protocol assets
- Yield flows back to depositor directly
- Represented by 3Receipts (ERC-20 tokens)
- Composable into 3.NFTs for advanced strategies
Parent Balance & Child Balance
Parent Balance
The working principal — the capital actively deployed in yield-generating strategies. Parent Balances generate yield through active strategies and can grow through Child → Parent migrations.
Key: Parent Balances are represented by 3Receipts (ERC-20 tokens) — fully transferable and liquid claims on the working principal.
Child Balance
The accumulated yield — always self-compounding. Child Balances grow automatically as strategies generate returns. They can be migrated to the Parent Balance to increase the working capital and accelerate future yield.
Key: Child → Parent migration increases the working balance, which accelerates future yield generation — a compounding flywheel.
The Signal System
Depositors control how their yield is routed through signals — programmable instructions attached to positions. Two primary signal types govern yield behavior:
SELF_COMPOUND
Reinvests yield back into the same position. Child Balance yield is recycled into the same CDP, growing the position autonomously. The default signal for straightforward compounding growth.
BOOST
Redirects yield to a different CDP's Child Balance. This enables cross-position yield routing — one position can fuel the growth of another, creating strategic yield architectures.
Composability: 3Receipts & 3.NFTs
3Receipts
ERC-20 Tokens3Receipts are direct claims on Parent Balances. Each 3Receipt represents a proportional share of a specific position's working principal. They are fully transferable, liquid, and composable — meaning they can be traded, used as building blocks, or composed into higher-order instruments.
3.NFTs
ERC-721 Tokens3.NFTs are composed from multiple 3Receipts using a fractal structure. They bundle multiple positions into a single instrument and carry the special LIQUIDATION_PATH signal — which consolidates all underlying yield into crvUSD.
Fractal Composition Levels
Protocol-owned 3.NFTs use the LIQUIDATION_PATH signal to convert all yield into crvUSD, which flows to Settlement support and protocol revenue. This is how the Grove generates revenue for the entire system.
Critical Separation: No Cross-Contamination
The Grove's Treasury and the Reserve's Vault are architecturally separated. This is a foundational risk management principle — volatility in one pool cannot affect the other.
The Vault (Reserve)
- Holds: ETH (Pristine ETH + AutoETH)
- Backs: GUILD (sovereign currency)
- Managed by: The Reserve
The Treasury (Grove)
- Holds: Protocol-Held Assets (PHA)
- Backs: 3Fi (governance equity)
- Managed by: The Grove
Two Pools. Two Purposes. One Architecture.
Treasury PHA volatility cannot affect GUILD stability. Vault ETH cannot be claimed by 3Fi holders. This isolation is constitutional.