# Reserve Fund

The Reserve Fund functions as both Yuzu Alpha’s balance sheet buffer and "treasury".\
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At the start of every epoch, the protocol announces its yield distribution. Yield is then distributed from the Reserve Fund. During surplus weeks, when the protocol generates more yield than it distributes (realized P\&L > distributed yield), the excess accrues to the Reserve Fund. During deficit weeks (realized P\&L < distributed yield), the Reserve Fund underwrites the deficit. \
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Over time, consistent surplus capture is intended to grow the Reserve, stabilizing yields across cycles, strengthening long-term sustainability and accruing value to the protocol.\
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The Reserve Fund's primary uses includes:

* Value accrual to the governance token,&#x20;
* Covering operating and administrative costs,&#x20;
* Supporting ecosystem growth and strategic partnerships,&#x20;
* Absorbing unforeseen losses that exceed yzPP’s first-loss protection.


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