> 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/risk-framework/rwa-risk.md). # RWA Risk Ledgity’s yield is primarily generated through Real-World Assets (RWA) managed by the SARR Fund, a regulated investment vehicle. The objective is to produce stable, recurring cash-flow–based returns while minimizing capital and liquidity risk. The strategy is built on **short-duration, high-transparency credit exposure**, without leverage or speculative instruments. *** #### Asset Selection The RWA portfolio only includes assets that meet the following criteria: * Short maturity and predictable repayment schedules * Clear and auditable cash flows * Verified and financially credible counterparties * Senior or secured position in the capital stack * Fully traceable through regulated intermediaries If an asset category introduces long-term lockups, mark-to-market uncertainty, or opaque valuation, it is excluded. *** #### Explicitly Excluded RWA Categories To avoid liquidity mismatch and valuation risk, Ledgity does **not** invest in: * Real estate development or renovation loans * Long-duration bonds with multi-year duration * Structured or tranche-layered credit products * Synthetic or derivative-based yield * Any collateral dependent on speculative market conditions This approach eliminates the failure patterns observed in many RWA protocols (frozen redemptions, repayment gaps, pricing opacity). *** #### Portfolio Construction * Diversified across multiple issuers * Short-duration repayment cycles to support ongoing withdrawals * No leverage and no rehypothecation * Yield is generated by contractual repayment, not token incentives The priority is **capital stability**, not maximizing APY. *** #### Counterparty Monitoring Each portfolio exposure undergoes: * Business and financial due diligence * Creditworthiness and repayment analysis * Legal enforceability review * Continuous monitoring during the entire lending period Risk scoring is updated as cash flows occur, not only at onboarding. *** #### Liquidity Alignment The RWA portfolio is structured to align **repayment frequency** with **on-chain withdrawal expectations**.\ Short-duration cycles ensure capital continuously returns to the vaults. This prevents the liquidity mismatch that occurs when long-term assets are used in products with daily withdrawals. *** #### Reporting & Transparency The SARR Fund provides periodic reporting and reconciliation, allowing the protocol to align: * RWA yield performance * Vault PPS (Price-Per-Share) growth * Liquidity planning for withdrawals Yield observed on-chain is directly supported by real, documented economic activity. --- # Agent Instructions This documentation is published with GitBook. GitBook is the documentation platform designed so that both humans and AI agents can read, navigate, and reason over technical content effectively. Learn more at gitbook.com. ## Querying This Documentation If you need additional information that is not directly available in this page, you can query the documentation by asking a question. Perform an HTTP GET request on the following URL with the `ask` and `goal` query parameters: ``` GET https://docs.ledgity.finance/risk-framework/rwa-risk.md?ask=&goal= ``` `ask` is the immediate question: it should be specific, self-contained, and written in natural language. `goal` is what the user is ultimately trying to achieve, the reason they need the answer. Sharing it helps GitBook give you a better, more relevant answer. A goal is most helpful when it describes the outcome the user wants rather than restating the question. For example, with `ask=how do I create an API token`, a goal like `automate deployments from our CI pipeline` lets GitBook tailor the answer to that use case. The response will contain a direct answer to the question and relevant excerpts and sources from the documentation. Use this mechanism when the answer is not explicitly present in the current page, you need clarification or additional context, or you want to retrieve related documentation sections.