Vaults
Protocol vaults with first loss capital and RAVA senior capital on top. Dynamic leverage, zero coupon, upside sharing.
Protocol Vaults
The protocol deposits first loss capital. RAVA layers senior capital on top. The combined capital is used to acquire RWA tokens at a discount during liquidations. The leverage ratio is dynamic. It changes every 5 seconds based on proxy baskets and on chain risk signals.
Who deposits first loss: Protocols raising capital to be liquidation layers for tokenized real world assets. They want leverage to acquire discounted tokens at scale.
Why protocols use this: Zero coupon senior capital. No periodic interest. Instead of paying to borrow, they share the upside of each liquidation with RAVA. The more they liquidate, the more both sides earn.
Dynamic Allocation
The amount of senior capital allocated per asset is not fixed. It changes every 5 seconds based on four signals:
- Proxy CVaR. Tail risk from publicly traded equivalents.
- Bleed rate. 30 day token supply change.
- Issuer liquidity. Instant redemption capacity.
- Queue pressure. Pending redemptions vs quarterly capacity.
More risk means less leverage. Less risk means more leverage. The protocol sees their available leverage in real time.
Hedging
RAVA hedges its senior capital exposure with call and put options on the proxy baskets in the same category as each RWA. The hedging cost is absorbed by RAVA. Protocols do not pay for it.
Risk
NAV impairment. If the underlying fund loses value and NAV drops below acquisition cost, the first loss tranche absorbs the hit first. RAVA senior capital is protected by the subordination.
Warehousing risk. The vault holds tokens while waiting for issuer redemption. During that period, NAV can move and the issuer can gate redemptions. First loss capital absorbs shortfalls before senior capital is impacted.
Leverage reduction. If risk signals deteriorate, RAVA reduces leverage in real time. The protocol may need to deposit more first loss or reduce positions.
Upside Waterfall
On each profitable liquidation:
- Protocol earns on its first loss tranche first.
- RAVA earns a share of the upside as senior capital.
- No coupon was charged. The upside share is the only cost.
If a liquidation results in a loss, the protocol first loss tranche absorbs it. RAVA senior capital is impacted only after first loss is fully depleted.