Liquidity Risk
Ledgity is designed to provide yield while maintaining reliable withdrawal availability. To achieve this, the protocol avoids the liquidity mismatch that commonly occurs when long-duration assets are combined with on-chain withdrawal expectations.
Liquidity risk is managed through allocation structure, repayment scheduling, and on-chain liquidity buffering.
Liquidity Model
Each vault uses a three-layer liquidity design:
On-chain Liquidity Buffer (~5%)
Supports everyday withdrawals
Instant
Short-Duration RWA Repayments (~80%)
Provides ongoing liquidity through recurring repayment cycles
~24–72 hours
Coordinated Liquidity Schedule (for large withdrawals)
Ensures portfolio stability during exceptional outflows
Case-by-case coordination
This structure ensures that day-to-day withdrawals are seamless, while maintaining portfolio health over time.
No Duration Mismatch
Only short-duration and recurring cash-flow instruments are used in the RWA allocation. This prevents the common failure mode in RWA yield products where users expect daily liquidity but the underlying assets repay over months or years.
Ledgity does not allocate to:
Real estate development loans
Multi-year credit instruments
Long-term fixed income requiring mark-to-market liquidation
By matching asset duration with withdrawal patterns, withdrawal queues and redemption freezes are avoided.
On-Chain PPS Reflection
Yield is not distributed manually or via rebase. Instead, vault performance increases PPS (Price Per Share) continuously.
This means that:
Withdrawals do not require selling yield-bearing receipts
There is no incentive to exit early
Yield is always fully accounted for
This model stabilizes behavior during periods of market stress.
Large Withdrawals
Withdrawals that exceed the available liquidity buffer and current repayment cycle are still honored, but require coordinated scheduling to avoid unnecessary forced liquidation.
This ensures:
Portfolio integrity
No panic selling of underlying assets
Fair treatment across depositors
Users remain informed throughout the process.
Risk Controls & Monitoring
Liquidity is monitored continuously across:
RWA repayment calendar
Liquidity buffer levels
New deposit/withdrawal flows
Market conditions relevant to RWA instruments
The Council can adjust liquidity allocation parameters through governance if required.
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