The law of the vault.

1 · Facets

A facet is an ERC-20 token that stands for one thousandth of an NFT from a given collection. Every collection has its own facets and its own vault: the facets of one collection say nothing about another. The ratio is the same everywhere, one NFT for a thousand facets, so there is one rule to learn, not one per collection.

Facets and $FACET are two different things. Facets are the fractions; $FACET is the protocol's own token, described in section 7.

2 · The vault

Each collection has a vault. Deposit an NFT into it and the vault mints a thousand facets of that collection to you, in the same transaction. The supply of a collection's facets is therefore always exactly a thousand times the number of NFTs sitting in its vault: facets are minted when an NFT enters and burned when one leaves, and nothing else creates or destroys them.

The first deposit into a new collection creates its vault, its facets and its pool at once. Any collection that lives on Robinhood Chain can be deposited; today none is inherited from elsewhere, which is why collections are launched on Facet rather than brought to it (section 5).

3 · Trading

Every collection's facets trade in their own Uniswap v4 pool, against ETH. A facet trades like any token: sell a hundred to keep most of an NFT and let some go, buy fifty to hold a sliver of a collection you could not afford whole. The price of a facet, times a thousand, is the collection's floor as the market sees it, refreshed at every swap.

Liquidity comes from whoever provides it. The first depositor of a collection can seed its pool with facets and ETH in the same call; at a launch, the collection's creator does it by design (section 5).

4 · Redemption

A thousand facets of a collection can be burned to take an NFT of that collection out of the vault. Two ways:

• Random. Burn a thousand facets, receive one of the NFTs in the vault, drawn without preference. Nothing more is charged.
• Specific. Name the NFT you want. It has to be in the vault, and you burn a thousand facets plus a premium, set at deploy, for the right to choose.

The premium exists because choice is worth something: without it, anyone could buy a thousand facets at the floor and take the rarest piece out. It does not close that gap entirely, it makes it expensive.

If the vault is empty, redemption reverts. The facets keep trading; the moment an NFT is deposited again, redemption reopens. A vault that only holds the pieces nobody wants is corrected by the market: the facet price reflects what is inside, and it becomes worth depositing better pieces to take out the facets.

5 · Launching a collection

Robinhood Chain has no inherited collections to fragment, so Facet does not wait for one. A new collection mints on Facet: part of it is sold as whole NFTs, part goes straight into the vault, and the facets that come out of it seed the collection's pool together with part of the mint proceeds. The market is open from the block of the mint, and the floor is known immediately: the facet price, times a thousand.

The split between whole pieces sold, pieces faceted for liquidity and pieces kept by the creator is chosen per collection at its launch and published with it. The floor implied by the pool at the open can be set below the mint price on purpose, so that the first buyers of facets are not paying more than the minters did.

6 · Fees

Every swap in a collection's pool pays one fee, taken by the Facet hook attached to the pool and split three ways: to the liquidity providers of that pool, to the protocol, whose share buys $FACET on its own pool and burns it, and to the depositors who put whole NFTs into the vault, who are paid for having created the liquidity in the first place. Liquidity providers are paid in ETH from real swaps; there is no emission of any token to pay anyone.

Deposits, redemptions and transfers of facets carry no fee of their own. The fee and its split are constants of the deployment (section 10).

7 · The $FACET token

$FACET is the protocol's token, one for the whole system, with a fixed supply. Its supply and its allocation, public launch, liquidity, treasury, team and early backers with vesting for the last two, are set at launch and published on this page. It is bought and burned with the protocol's share of every swap fee, on every collection's pool.

What it does: a reduced premium on specific redemptions for holders, a larger share of fees for liquidity providers who stake it, and a vote on the protocol's adjustable parameters. It is not minted to pay liquidity providers, and it is not a claim on any NFT.

8 · What the contracts enforce

These hold on every block. If any of them fails, the contract is wrong, not the rule.

9 · What can go wrong

The vault

A bug that lets an NFT out without burning facets would empty a vault. The vault contract is audited and carries a bug bounty before anything reaches mainnet; both are gates, not promises, and nothing is deployed before they are passed.

The gap between facets and floor

When the facet price drifts from what the vault holds, arbitrage closes it: buy facets and redeem when they are cheap, deposit and sell when they are dear. The specific-redemption premium is what keeps the rarest pieces from being picked off at the floor; it makes that expensive, not impossible.

The pause

The contracts carry an emergency pause held by a multisig. It is a switch, and it is a trust assumption: it is written here so that nobody discovers it after the fact.

Stolen pieces

The vault cannot tell a stolen NFT from a legitimate one. This is the hole in the model, and it is stated as such: a piece flagged as stolen elsewhere can still be deposited and faceted here.

Liquidity providers

Providing liquidity to a pool can leave you with less than simply holding would have. This is true of every AMM and it is true here; holding facets without providing liquidity is always an option.

The law

A thousand fungible parts of one NFT is the most direct form of fractional ownership there is, and in some jurisdictions that is a regulated instrument. A legal opinion on this point is a gate before launch, at the same rank as the audit.

A collection that collapses

If a collection's floor collapses, its facets follow. The protocol is not exposed: each vault stands alone, and nothing in one collection can reach another.

10 · Parameters

Constants are fixed at deployment and published here. Adjustable parameters, where they exist, are marked as such, with who can change them.

11 · Chain and venue

Facet runs on Robinhood Chain, chain id 4663 (0x1237), an Ethereum L2 on the Arbitrum Orbit stack. Gas is paid in ETH, at a gas price around 0.02 gwei on this chain. Every collection's pool is a Uniswap v4 pool on the chain's PoolManager, quoted in native ETH, with the Facet hook attached.

The hook

The Facet hook runs after every swap in a collection's pool. It takes the fee and routes its three shares: liquidity providers, the buy-and-burn of $FACET, and the depositors of that collection. Deposits and redemptions are direct calls to the vault, not swaps.