🏃 Disaster Recovery Fund (DRF)

Why a disaster recovery system exists

REAL states that insurance companies are a core point of failure:
If an insurer fails to meet obligations, users still need protection.

What happens when insurance fails

If the insurer’s staked REAL + stablecoins can’t cover losses:

• asset token holders receive a Network Debt Token (NDT)

• users are eligible to be compensated up to their realized loss

How NDT redemption works

• 1 NDT = 1 network token redeemable from the Disaster Recovery Fund (DRF) each month

Why NDT expires

• NDTs expire 2 years after issuance
  This is meant to prevent endless debt loops and discourage bad behavior from business entities.

The key design claim: “no additional inflation”

The DRF is funded by reducing inflation rewards for business entities when debt is present, and using that portion to repay asset holders.

REAL explicitly states this approach avoids a “Terra/LUNA-like” inflation spiral because it does not add new inflation on top of the protocol’s existing issuance.