Contributing pWatts to the Reserve

A core mechanism of the Suno Protocol is the ability for pWatt holders to transfer ownership of their tokens to the Reserve in exchange for newly issued uWatts. This process allows participants to convert project-specific exposure into a diversified, liquid asset, while also expanding the Reserve’s collateral base.

When a Transfer is Possible

Only pWatts from fully operational projects are eligible for transfer into the Reserve. This ensures that the Reserve is backed exclusively by income-generating assets with measurable performance and real-time energy data. Once a project reaches operational status, its pWatt holders can initiate the transfer at any time—there is no fixed window or expiration for this opportunity.

uWatts are only created when a participant contributes pWatts of operational projects to the Suno Reserve. This ensures that every uWatt is backed by functional real-world projects.

Valuation and uWatt Minting

The number of uWatts a participant receives in exchange for their pWatts is determined by the intrinsic value of the project being contributed. This value is calculated using a standardized Net Present Value (NPV) model, which discounts the expected future cash flows of the project to present-day terms.

The Protocol computes:

$$\textnormal{uWatts to mint} = \frac{\textnormal{NPV of contributed pWatts}}{\textnormal{Current uWatt Reference Value}}$$

This ensures that:

• The amount of uWatts minted reflects the economic value of the asset entering the Reserve.

• The Reserve maintains a 1:1 value ratio between its TVL (Total Value Locked) and the total uWatt supply.

The NPV model considers variables such as:

• Remaining operational life

• Expected annual cash flow

• Discount rates based on market or protocol-specific factors

• Historical performance of the asset

All calculations are handled by smart contracts or oracles to ensure transparency and consistency.

Incentives for Participants

This mechanism creates a compelling incentive for pWatt holders to contribute to the Reserve. In many cases, the NPV of a newly operational project exceeds its original funding cost (the pWatt acquisition price) by 15–25%, meaning participants may receive more value in uWatts than their initial investment—especially if they enter early and exit shortly after commissioning.

In addition, by converting pWatts into uWatts, participants gain access to:

• Greater liquidity

• A more diversified source of yield

• Secondary market depth and composability across DeFi applications

Strategic Importance

This transfer-and-mint mechanism is what enables the transition from isolated infrastructure ownership to a pooled, liquid asset base. It turns fragmented energy projects into a composable financial layer while maintaining a direct, verifiable link to real-world economic activity.

It also allows early capital to be recycled into new project origination, ensuring the Protocol’s long-term scalability and impact. This is because when project-specific pWatts are transferred into the Reserve, investors can sell some or all of their minted uWatts or hold them for blended yield.

By selling uWatts, early backers unlock capital that was previously tied and locked in a single project, freeing it up to be reinvested into new pWatt issuances, funding the next wave of clean energy infrastructure. In parallel, the protocol can allocate a portion of Reserve income to acquire new pWatts, offset depreciation, and further expand the asset base - creating a regenerative cycle where existing capital continuously fuels new project development.

Protocol Fee and Team Incentives

To align long-term incentives and sustain protocol development, the Suno Protocol charges a 2% fee on every uWatt issuance resulting from the pWatt-to-uWatt conversion process. This means that when a participant contributes pWatts to the Reserve, 2% of the newly minted uWatts are automatically allocated to a dedicated staking address.

The uWatts held in this address remain staked in the system, earning yield from the Reserve alongside all other holders. The income generated by this staking position is directed to the Suno team as a form of protocol-native compensation.

This mechanism ensures the team’s incentives are directly tied to the long-term performance and sustainability of the Reserve, and by extension, the value of the uWatt. Rather than relying exclusively on upfront fees or short-term extraction, the Suno Protocol is designed so that its core contributors benefit from the protocol’s success in the same way as long-term participants—through real, energy-backed revenue.