FLYWHEEL 2.0 Phase 3–4 · Sepolia testnet · fuzzed & self-reviewed

FLYWHEEL 2.0 — Closing the Reinvestment Loop

How Keep became the ecosystem revenue accumulator, CoilMakerStrategy was promoted to primary, and the TARE surplus now feeds directly into Coil market-making — turning four protocols into a single self-funding flywheel.

↻ FLYWHEEL 2.0 is live on Sepolia. Four contracts, five permissionless routers, one closed profit loop. Everything below is fuzzed, fork-tested, and self-reviewed — not audited.

The Closure Loop

What Changed

FLYWHEEL 2.0 addresses four diagnosed gaps in the original Phase 3–4 design:

Keep had no yield moat. 3 of 4 strategies (Aave, Compound, Morpho) were generic USDC lending. Users could access the same yield directly — no Keep lockup, no smart contract risk. Fix: Keep is now an ecosystem revenue accumulator, generating proprietary yield from Coil's trading spread and fee discounts.
veForge votes were theater. Gauge votes shifted capital between strategies with similar base yields, so nobody voted. Fix: Gauge weights now determine Keep's capital allocation to CoilMakerStrategy — a vote is a capital tilt with real yield consequences.
TARE's peg defense was single-line. The Curve pool was the only peg defense. Fix: The surplus reinvestment loop gives TARE a second line — surplus deployed into Keep → Coil generates fees that refill the surplus.
Coil needed seeded liquidity. No users, no liquidity, no solvers. Fix: Keep's CoilMakerStrategy is now the primary order flow source, seeded by Coil's own fee revenue.

New Fee Flow

Coil fees (USDC) → CoilFeeRouter
  ├── keep_bps (0-50%) → Keep vault  ★ FLYWHEEL 2.0
  ├── gauge_bps (0-50%) → veForge voters
  └── rest → TARE surplus buffer

TARE stability fees → SurplusSplitter
  ├── emission_bps (≤30%) → Keep vault  ★ WAS: veForge
  └── rest → sTARE (savings vault)

Keep vault → CoilMakerStrategy (PRIMARY)
  → Trading spread + fee discount → Keep yield
  → Excess → TARE surplus (reinvests in Coil liquidity)

Strategy Priority (Keep Vault)

The Keep vault now uses a strict priority queue:

CoilMakerStrategy — always preferred. Deploys USDC into Coil batch-auction orders, earning trading spread (bid-ask) and fee discounts on Keep's own activity.
CurveTAREStrategy — second priority. Provides liquidity to the TARE/USDC Curve pool, earning swap fees and supporting the peg.
Aave/Compound/Morpho (fallback) — used only when no internal revenue opportunities exist.

The Flywheel Closure

The actual profit loop that was missing in the original design:

Coil DEX generates USDC fees from batch-auction settlement.
CoilFeeRouter splits fees 3 ways: keep_bps to Keep vault, gauge_bps to veForge voters, remainder to TARE surplus buffer.
Keep vault deploys capital to CoilMakerStrategy (priority 0) — its primary yield source.
CoilMakerStrategy earns trading spread + fee discount from making markets on Coil — proprietary yield no generic lending can match.
TARE SurplusSplitter sends emission slice (≤30%) to Keep vault, rest to sTARE savers.
Keep vault routes TARE surplus into Coil markets (via swap + CoilMakerStrategy order flow).
More Coil volume → more fees → more surplus → more Keep yield → deeper Coil liquidity → loop reinforces.

Core invariant: No vote, keeper, admin, or caller may move a solvent user's collateral, mint on a bad price, or alter live debt. Routers only move value already released or earned — the flywheel turns on earned fees, not printed tokens.

Sepolia Deployments

Contract	Role	Address
CoilFeeRouter	3-way fee split (keep/gauge/TARE surplus)	0xB620…50F5
SurplusSplitter	TARE surplus → Keep (≤30%) + sTARE	0xe01C…AFFfa
GaugeWeightRouter (R1)	veForge votes steer Keep capital allocation	0xa4AA…a16C
CoilMakerStrategy (C)	Primary market maker — Keep deploys to Coil	0xEf52…3BaF
EmissionRouter (TARE)	Routes TARE emissions to Keep vault	0x29AA…86d1

Key Metrics

Keep APY from Coil spread: 0% → > lending APY (target — first proprietary yield source)
veForge voter turnout: ~0% → >10% (target — votes now steer real capital, have yield consequences)
TARE peg volatility: Buffer-only → Buffer + Keep reinvestment loop (second line of defense)
Tests passing (all 4 repos): ~550 → ~650+ (with cross-protocol invariants fuzzed across router boundaries)
Fork-proven yield: 1000 USDC → 1001.94 USDC in one Keep → CoilMaker round trip

Router Architecture

Every connection in the flywheel is a small, permissionless router with exactly one bounded action:

CoilFeeRouter (A): Reads accumulated USDC fees from Coil, splits into 3 streams. Cannot mint. Cannot access user positions. Can only send already-earned fees.
SurplusSplitter: Reads TARE surplus balance, splits into sTARE (senior) and emission (junior, ≤30% capped). Cannot alter live debt.
GaugeWeightRouter (R1): Reads veForge gauge weights. Only adjusts Keep's vault allocation — cannot move user funds.
CoilMakerStrategy (C): EIP-1271 on-chain maker. Places limit orders on Coil at or above the EMA oracle floor. Cannot be filled below a fair price.

The worst a bad actor can do is leave money on the table — they cannot steal it.

Phase 3: Gauge Spine