FAQ

Alchemy is a Cardano-native Bitcoin treasury and liquidity system. It creates two reserve-backed assets - FIRE (BTC+) and ICE (BTC−) - from a shared Bitcoin reserve using the Charms protocol and Sundial's BTC platform. The system is being proposed for Cardano treasury funding to launch initial liquidity.

FIRE is the junior reserve-growth asset. It absorbs downside first and captures residual upside after ICE liabilities are met — providing higher-beta BTC exposure without margin calls or liquidation mechanics. Its price is:where V is vault BTC, PBTC is BTC price, L is total ICE liabilities, and NFIRE is FIRE token supply.

ICE is the senior BTC-backed claim. It is a lower-volatility, USD-denominated asset with priority redemption over FIRE in the shared vault. Each ICE token redeems at a fixed face value:where F is the fixed USD face value per ICE token, settled in BTC at the prevailing spot price. F grows over time through reserve yield and appreciation, but does not capture BTC upside beyond the fixed redemption value.

No. ICE does not bet against Bitcoin's price. It is the senior claim in a reserve structure backed by BTC. Bitcoin going up is positive for the reserve; ICE simply takes a more conservative, senior-priority position on those gains. Holding ICE is structurally closer to holding a senior secured bond than a short position.

The reserve ratio measures total BTC vault value against outstanding ICE liabilities:A 4.0× ratio means the vault holds four dollars of BTC for every dollar of ICE liability. This overcollateralization protects ICE holders and gives FIRE room to capture upside.

Healthy (above 4.0×): FIRE redeemable, ICE mintable, all normal activity enabled. Buffer (2.0× to 4.0×): New ICE minting is paused, FIRE redemption becomes constrained. Locked (below 2.0×): New minting and redemption is constrained to prevent further reserve stress. These thresholds activate automatically based on the live reserve ratio.

FIRE absorbs the downside first - its value falls proportionally as the vault's residual value above ICE liabilities decreases. ICE is more protected because it holds the senior claim. If the reserve ratio falls below 2.0×, the system automatically activates redemption and minting constraints to prevent further stress. The reserve can only recover through BTC price appreciation or new vault inflows.

Redemption is conditional on the reserve zone. In Healthy (above 4.0×), both assets can be redeemed normally. In Buffer (2.0×–4.0×), FIRE redemption is constrained. In Locked (below 2.0×), redemption gates activate for both assets. This design prevents runs that would destabilize the reserve.

Launch liquidity is deployed in three tranches: $250K after audit and launch-readiness review; $250K after public reporting, operational review, and a 30-day grace period; and $500K after mint/redeem thresholds, reserve ratio tracking, growth monitoring, and dashboard performance are confirmed. The $1M liquidity pool is separately tracked from the $1M delivery budget. We're in discussions with third-party administrators to provide additional oversight and reporting.

Sundial will submit a formal governance proposal, allowing DReps and the Constitutional Committee to vote on whether to return the full $1.0M principal to the Treasury ADA wallet. If approved, Sundial converts all funds back to ADA via Cardano-native DEXs at prevailing rates.

No. Treasury-supported liquidity is deployed into a protocol exposed to BTC price risk, reserve health risk, oracle risk, bridge and locker risk, and DeFi liquidity risk. These risks are mitigated through staged deployment, audit gates, always-on public dashboards, reserve constraints, and monthly governance reporting - but they cannot be eliminated entirely.