> For the complete documentation index, see [llms.txt](https://docs.liquidroyalty.com/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.liquidroyalty.com/introduction/participants-and-roles.md).

# Participants & Roles

**1. Overview of Key Participants**

The Liquid Royalty protocol is built on a multi-layered structure designed to align the interests of all stakeholders while ensuring regulatory compliance and long-term stability. The core participants include:

* **Merchants:** Each Royalty Token represents a portfolio of e‑shops. Merchants remain in control of their day‑to‑day operations and generate revenue; however, they typically commit to a [**Performance-Linked Stake**](/introduction/readme-2.md#performance-linked-stake) as collateral (size is set per listing; figures such as “15% of market cap” elsewhere are **illustrative only**). This stake is gradually unlocked as revenue performance targets are met, ensuring that merchants remain aligned with investor interests.
* **Stakers:** Investors who acquire Royalty Token gain direct exposure to the underlying e‑shops' cashflow growth. Additionally, stakers can opt into the platform's **staking product**—a mechanism that holds up to 50% Royalty Token on its balance sheet. Unlike direct royalty-sharing, this staking product is structured as a utility tool (and is not classified as a financial security) while delivering higher, more stable yields, and offering liquidity via decentralized exchanges.
* **Liquidity Providers & Market Makers:** These participants supply the necessary liquidity to the [Automated Market Maker (AMM)](/introduction/readme-2.md#algorithmic-market-maker-amm) pool and ensure smooth, continuous trading of Royalty Token. Their activity keeps spreads tight and the market efficient.
* **Credit Assessor:** Credit Assessor conducts due diligence and monitors merchant performance by verifying on‑chain revenue data.
* [**DAO Governance Participants**](/introduction/readme-2.md#dao-decentralized-autonomous-organization)**:** Royalty Token holders engage in decentralized governance via a DAO. They propose and vote on key decisions—ranging from protocol upgrades and treasury allocations to merchant onboarding or delistings—ensuring that the platform evolves in a way that protects investor interests.

**2. The Business Hook**

By combining direct exposure to e‑shop cashflow with a novel staking product that channels excess yield through our[ **Automated Liquidity Assurance Reserve (ALAR)**](/introduction/readme-2.md#automated-liquidity-assurance-reserve-alar), Royalty Token transforms traditional private credit models. Investors enjoy the benefits of automated enforcement, transparency, and liquid market access—offering a more efficient, risk‑adjusted alternative to conventional financial intermediaries.