Underlying Assets & Revenues

“Finally, a new high-yield market will be needed to fund the physical infrastructure of the digital economy. In the 1980s, Michael Milken built a credit market for firms traditional lenders ignored—young, fast-growing, high-risk. His work showed that risk could be priced and distributed if better understood, creating a new channel for economic growth. Today, that channel must finance compute, energy, manufacturing, and other capital-intensive sectors critical to long-term competitiveness. These investments are too large for venture and too risky for conventional credit. A modern high-yield framework—transparent, distributed, and digitally native—could channel funds at scale while keeping risk contained.” – Nicolas Colin, Late Stage Investment Theory

DayFi's Distributed Energy Asset Base

DayFi finances distributed solar and battery storage systems in the United States, initially focusing on the residential market. Systems are owned by bankruptcy-remote special purpose vehicles (SPVs) and installed at host sites. A typical installation includes solar panels, a hybrid inverter, telemetry equipment, and a stationary battery sized to serve both the home and grid dispatch programs.

Residential assets provide diversification, short construction cycles, and consistent load profiles. When aggregated through DayFi's data standardization network, these systems form a large, flexible energy fleet that supports power grids at scale.

Revenue Dive

Revenues from each energy system fall into three categories: contracted host payments, virtual power plant (VPP) revenues, and government incentives or environmental attributes. Each has distinct contracts, data, and settlement schedules. A project may only include one, or all, of the three main revenue sources.

Power Purchase Agreements

Daylight financing is offered to hosts under a power purchase agreement (“PPA”) model, which Daylight refers to as an "Energy Subscription".

In a PPA, the host, or homeowner, gets solar installed at no upfront cost and contractually agrees to buy the electricity generated from the energy system at an agreed-upon price per kilowatt-hour. This is typically offered at a price lower than the homeowner's default utility electric rate for immediate monthly savings. The contracted price per kilowatt-hour is can be fixed or escalate slightly over time, which protects the host from utility rate volatility and inflation.

PPA contracts typically last 15-25 years, providing long-term visibility into energy production and cash flow. After the final payment, the customer has the option to buy the system or extend the PPA. Customers also have the ability to buy out the PPA contract starting in Year 6. This structure makes PPAs attractive to both sides: the host saves money without taking on debt or system maintenance, and the capital provider earns returns backed by real-world energy production.

Production risk is managed through standardized design practices, shading analysis, equipment warranties, insurance, and performance monitoring.

Virtual Power Plants

A Virtual Power Plant (VPP) is a coordinated fleet of distributed batteries that respond to grid signals as a unified, dispatchable power source. Instead of building large, centralized power plants, grid operators and energy companies can tap into this aggregated battery network to help balance electricity supply and demand, especially during peak periods or grid stress events. Most Energy Subscriptions include an oversized battery by default, designed specifically to maximize energy market participation.

VPP opportunities vary by market. Examples include demand response, capacity programs, frequency regulation, and day-ahead or real-time energy market dispatch. VPPs create a separate revenue line for DayFi paid by an energy market counterparty (referred to as “energy market operators” in the protocol), on top of the contracted host revenues. Settlement can be monthly or quarterly depending on program rules.

Federal, State, and Local Incentives

Government incentives reduce upfront capital costs and reward energy production. The federal Investment Tax Credit (ITC) covers up to 30% of system costs. Certain states offer Solar Renewable Energy Certificates (SRECs) or performance-based incentives tied to production or capacity. DayFi's structure allows direct monetization of these credits and attributes, adding a third source of predictable cash flow.

Summary

DayFi finances a distributed fleet of solar and storage systems under long-term PPAs, integrates every system into a virtual power plant, and captures incentive revenues.

The result is a portfolio of measurable, contract-based, and verified energy cash flows. By converting these flows into a liquid, onchain instrument, DayFi connects electricity generation directly to global capital markets.

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Asset Ownership

Assets are originated by a diversified origination network, with hosts required to pass governance-controlled underwriting standards to quality for the protocol's financing.

The protocol's sGRID vaults do not own the underlying assets directly. Instead, the protocol permissions bankruptcy-remote Special Purpose Vehicles ("SPVs") to serve as neutral legal protocol infrastructure for asset ownership. These SPVs are managed by independent managers for fairness and transparency. Independent managers perform strictly operational servicing (insurance, O&M, reporting) under standardized Servicing Agreements, without discretionary authority over asset selection, reinvestment, or NAV determination.

Independent managers are entitled to management fees for their services.

These SPVs issue a tokenized deed poll 1:1 against acquired PPAs to Daylight's lending pool, at which point they can borrow deposited capital against the Deed Poll.

The first whitelisted SPV participating in DayFi is THDFI HOLDINGS LLC, an entity independently managed by Turtle Hill Capital, an energy-focused speciality private credit platform, in partnership with Anode Labs, Inc.