Liquidity Pool

The Liquidity Pool Module is the beating heart of Silsilat’s decentralized finance engine. It connects pawnshops seeking liquidity with investors providing capital, operating autonomously through policy-bound smart nodes and Hedera Consensus Service (HCS) events.

This module ensures that the moment a pawnshop tokenizes a gold asset (SAG Token), funds are released automatically — creating instant, verifiable, and compliant liquidity.

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Core Function

The Liquidity Pool Module (LPM) acts as an automated market maker (AMM) for real-world asset tokens. It maintains equilibrium between three flows:

1. Asset inflow: Tokenized gold collateral (SAG Tokens).

2. Capital inflow: Liquidity provided by investors (in MYR-t, USDC, or HBAR).

3. Settlement outflow: Redemption and yield distribution upon loan maturity.

Each transaction follows deterministic logic executed by a Smart Node, ensuring transparent and tamper-proof outcomes without the gas costs or latency of EVM-based systems.

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Architecture Overview

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Token Relationships

Token	Role	Created By	Redeemed/Burned By
SAG (Secured Asset Gold)	Represents gold-collateralized asset	Pawnshop	Pawnshop upon redemption
LQT (Liquidity Token)	Represents investor’s share in pool	Liquidity Pool	Investor during withdrawal
SLC (optional governance token)	Tracks pool and treasury governance rights	Treasury	DAO or stakers

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Functional Flow

Step 1 — Pawnshop Tokenizes Collateral

• Pawnshop submits collateral data to SAG minting API.

• AI Evaluator Agent computes the loan-to-value (LTV) ratio.

• Policy Agent validates AML/KYC and Shariah compliance.

• Upon approval, SAG token is minted with metadata and valuation CID.

{
  "sag_id": "SAG-2025-01008",
  "ltv_ratio": 0.78,
  "valuation_myr": 8200,
  "policy_id": "AR_RAHNU_STD_2025"
}

Step 2 — Liquidity Request Triggered

• Pawnshop sends a liquidity request to the Liquidity Agent.

• Liquidity Agent verifies pool availability, pricing, and compliance hashes.

{
  "event": "liquidity_request",
  "sag_id": "SAG-2025-01008",
  "loan_value_myr": 6396,
  "trace_id": "f8e4a1b9-95ad-4fa3-8e32-90c42bcb1d77"
}

Step 3 — Smart Node Execution

• The Liquidity Pool Smart Node runs an AMM-like algorithm to allocate capital:

• If sufficient reserves exist, funds are disbursed instantly to the pawnshop’s linked account.

• The equivalent LQT tokens are minted to investors’ wallets based on proportional participation.

{
  "transaction_type": "disbursement",
  "pool_id": "POOL-MYR-001",
  "amount_myr": 6396,
  "lqt_issued": 6396,
  "timestamp": "2025-10-26T08:20:15Z"
}

Step 4 — Ongoing Tracking & Yield Accrual

• The Platform maintains continuous accounting of:

  • Active loans and pool utilization.

  • Daily yield accrual to LQT holders.

  • Policy compliance (LTV drift, repayment schedule).

• All events are published to HCS topics for transparency.

Step 5 — Redemption & Settlement

• When the loan matures, the pawnshop repays principal + profit share.

• The Smart Node burns the corresponding SAG token and updates investor balances.

• Investors can redeem their LQT tokens for principal + accrued yield.

{
  "event": "settlement_complete",
  "sag_id": "SAG-2025-01008",
  "redeemed_amount": 6396,
  "yield_paid": 8.0,
  "burn_tx": "0.0.556789"
}

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Pool Economics

Parameter	Description
Pool Size	Total available liquidity (in MYR-t, USDC, or HBAR)
Utilization Rate (U)	Fraction of capital currently deployed in loans
Base Yield (r₀)	Default investor yield set by policy
Dynamic Yield (r₁)	Adjusted yield based on pool utilization
Reserve Ratio (ρ)	Minimum capital buffer to maintain solvency
Policy Fee (f)	Platform + regulatory fee charged on each transaction

Dynamic Yield Formula

Where α is the yield sensitivity factor (policy adjustable).

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Example Scenario

Parameter	Value
Gold valuation	RM 10,000
Haircut (12%)	RM 8,800
LTV (78%)	RM 6,864
Loan term	6 months
Pawnshop fee	1.0%
Investor yield	8.0% p.a.
Platform fee	0.5%

Outcome

• Pawnshop receives RM 6,864 instantly.

• Liquidity pool earns RM 274 in total yield (6 months).

• Investor yield = RM 224 (8% p.a. prorated).

• Platform & compliance fee = RM 50.

• All records anchored via HCS + IPFS for post-audit verification.

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Platform Logic Overview

Core State Variables

POOL_BALANCE = 1000000
RESERVE_RATIO = 0.15
ACTIVE_LOANS = {}
YIELD_RATE = 0.08

Functions

def execute_liquidity_request(sag_id, loan_value, ltv_ratio):
    assert POOL_BALANCE * (1 - RESERVE_RATIO) > loan_value
    ACTIVE_LOANS[sag_id] = {
        "loan_value": loan_value,
        "ltv": ltv_ratio,
        "status": "active"
    }
    POOL_BALANCE -= loan_value
    mint_LQT_tokens(loan_value)
    publish_to_HCS("liquidity_executed", sag_id)

Event Hooks

• on_settlement() → burns LQT tokens, updates yield.

• on_default() → triggers Policy Agent for override and recovery.

• on_policy_update() → refreshes LTV limits and fee schedule dynamically.

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Compliance Integration

The Liquidity Pool only executes transactions validated by the Policy Engine:

• KYC & AML checks verified.

• Loan size below AML threshold.

• Shariah compliance confirmed.

• Policy version hash matched to current registry.

If any condition fails → transaction is rejected and logged on HCS_OVERRIDE_TOPIC_ID.

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Liquidity Pool Dashboard (for operators)

Metric	Description
TVL (Total Value Locked)	Total investor deposits
Utilization Ratio	% of pool currently deployed
Average LTV	Mean LTV of active loans
Yield Distribution	Daily / Monthly payouts
Compliance Status	Pass / Warning / Audit
Liquidity Risk Index	Composite score from AI risk model

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Risk Mitigation & Safeguards

Risk Type	Mitigation Strategy
Default Risk	Treasury reserve + insurance pool
Liquidity Shortfall	Dynamic yield adjustment and secondary pool routing
Market Volatility	Daily gold price revaluation and margin buffer
Policy Breach	Auto-freeze and override trigger
Smart Node Failure	Redundant validators + multi-signature governance

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Summary

The Liquidity Pool Module converts tokenized gold collateral into instant liquidity through trust-minimized automation:

• Deterministic execution: Platform logic ensures predictable, transparent transactions.

• Fair yield distribution: Investors earn from real, policy-compliant lending activity.

• Instant liquidity: Pawnshops access working capital within seconds.

• Immutable audit trail: Every event verifiable on Hedera + IPFS.

• Shariah-aligned structure: Profit-sharing, no interest-bearing mechanics.