> For the complete documentation index, see [llms.txt](https://docs.ledgity.finance/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.ledgity.finance/technical-information/yield-mechanics/liquidity-buffer-and-withdrawal-queue.md).

# Liquidity Buffer & Withdrawal Queue

Ledgity is designed to provide **stable yield without liquidity mismatch**.\
To do this, the protocol combines a **real-world yield portfolio** with an **on-chain liquidity buffer** that supports withdrawals at any time.

***

### **How Withdrawals Work**

When users withdraw, L-Tokens are redeemed for the underlying stablecoin at the **current PPS**.

Withdrawals are processed in two layers:

| Layer                           | Source of Funds                                                    | Purpose                          |
| ------------------------------- | ------------------------------------------------------------------ | -------------------------------- |
| **Liquidity Buffer** (on-chain) | Stablecoins held directly in protocol-controlled wallets           | Supports **instant withdrawals** |
| **RWA Settlement** (off-chain)  | Assets in the RWA portfolio (short-duration financing instruments) | Used for **larger withdrawals**  |

***

### **Withdrawal Settlement Times**

| Withdrawal Size (relative to vault TVL) | Settlement Time                                       | Notes                                                 |
| --------------------------------------- | ----------------------------------------------------- | ----------------------------------------------------- |
| **≤ 5%**                                | **Instant**                                           | Covered by the on-chain liquidity buffer              |
| **5% – 20%**                            | \~**24–72 hours**                                     | Requires RWA repayment cycle / liquidity rotation     |
| **> 20%**                               | **Scheduled with coordination** (typically 1–4 weeks) | Treasury team communicates timeline & execution steps |

The withdrawal schedule is designed to **match the liquidity profile** of the underlying assets — avoiding forced selling or degradation of yield.

***

### **Why This Matters**

This structure prevents the two most common failure modes seen in RWA protocols:

| Failure Mode                    | Without Liquidity Buffer                            | Ledgity’s Model                                       |
| ------------------------------- | --------------------------------------------------- | ----------------------------------------------------- |
| Liquidity Mismatch              | RWA assets are long-duration → users can’t withdraw | Portfolio uses **short-duration** strategies + buffer |
| Forced Liquidation Under Stress | Selling assets during down cycles destroys yield    | Withdrawals **follow cash-flow cycles** instead       |

Result:

> **Capital remains productive, yet always accessible.**

***

### **Buffer Management**

The liquidity buffer is dynamically adjusted based on:

* Vault TVL size
* Withdrawal frequency
* Market conditions
* RWA cash flow schedules

Buffer levels are monitored continuously and rebalanced to ensure **smooth withdrawal processing**.

***

### **Transparency**

All withdrawal states are visible in the app:

| Display                       | Meaning                             |
| ----------------------------- | ----------------------------------- |
| **Instant available**         | Amount withdrawable directly        |
| **Queued amount**             | Scheduled for next settlement cycle |
| **Estimated settlement date** | Based on RWA repayment calendar     |

Users always know **where their withdrawal stands** — no opacity, no guessing.

***

### **In Short**

> The Liquidity Buffer enables **instant withdrawals** for day-to-day user activity, while the Withdrawal Queue ensures **predictable settlements** for larger exits — all without compromising yield stability.

This is the **core principle**:\
**Real yield without liquidity traps**


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