Platform Mechanics

Seamless Asset Tokenization, Secure Staking, and Transparent Yield Generation through Decentralized, Automated Financing

1. Asset Onboarding & Tokenization

• Merchant Registration: E‑shops join the Liquid Royalty Protocol network by registering on‑chain and integrating with revenue tracking APIs from e-commerce platform (i.e. Amazon, Shopify) and payment gateway (i.e Airwallex, Lianlian). Each merchant's performance is transparently recorded to inform yield distributions.

• Performance-Linked Stake: At listing, merchants typically lock a Performance-Linked Stake (exact size is set per RTGE; “15% of market cap” or similar figures are illustrative only). This locked amount is held in the Automated Liquidity Assurance Reserve (ALAR) and is gradually unlocked in installments as the merchant achieves pre‑defined revenue targets. This mechanism not only secures the merchant’s commitment but also acts as a credit enhancement tool for stakers.

2. Funding & Liquidity Pool Structure

• Pooled Staking Model: Investors (stakers) contribute Royalty Token to the platform's AMM liquidity pool. Unlike traditional financing, these funds are not allocated directly to any merchant; rather, they are managed algorithmically by smart contracts. This structure protects investor capital by eliminating direct exposure to merchant operations while still allowing stakers to benefit from the underlying e‑shop cashflows.

• ALAR ** / Protocol Reserve Backing:** The funds locked via the Performance‑Linked Stake, combined with chain partner incentives and stablecoin incentives (e.g., rewards from the use of Ethena USDe), form the Automated Liquidity Assurance Reserve (ALAR) (Protocol Reserve). ALAR helps back the Senior Vault’s 11% APY floor · 13% cap, underpinning investor confidence with a clear yield band.

3. Yield Generation & Distribution

• Multi-Source Yield: Staking rewards are generated through three primary channels:

  • AMM Trading Activity: Swap fees from on‑chain trading contribute to the yield.

  • NAV Growth: As the value of the pooled assets appreciates, stakers share in this upside.

  • ALAR Incentives: Bonus rewards from ALAR—including chain and stablecoin (USDe) incentives, plus gradual unlocking of merchant Performance‑Linked Stakes—boost overall yields.

• Tranche Structure: The staking pool is segmented into risk tiers:

  • Senior Vault** (snrUSD):** 11% APY floor · 13% cap, backed by Junior and the Protocol Reserve (ALAR).

  • Junior Vault** (JNR):** Private, variable returns; receives 80% of yield above Senior’s cap (Protocol Reserve receives the remaining 20%).

• Redemption & Exit: Standard unstaking is available after the lock-up period. To deter short‑term dividend farming, early unstaking (within one week) incurs an urgent liquidation fee of 20% on the unstaked amount.

4. The Business Hook

By automating revenue capture and aligning incentives through ALAR and the Performance‑Linked Stake, Royalty Token redefines asset financing. It replaces traditional, opaque financing models with a fully transparent, decentralized process that ensures robust yield—even in volatile market conditions—while offering liquidity and ease of exit on decentralized exchanges.