6. Market Formation

RAVA turns long and illiquid RWA asset yield into a live market that trades continuously. This trading activity generates fees that flow back to the original LP who contributed their yield rights. The LP's previously locked position now produces ongoing income. This transforms lending from NAV projection based to actual trading fee income backed. Many RWA funds, including those structured as ERC-4626 vaults, earn real income from loans, rent, or receivables. When that income is received by the fund it becomes realized yield, but when it is reinvested instead of distributed it becomes unrealized again as new assets are purchased. Each increase in the vault's share price reflects real, cash backed yield that has already been earned, not an estimate or appraisal.

RAVA converts this performance into a transparent market signal through Realized Yield Indexes. The RAVA Yield Index tracks each vault's share price or net asset value and updates as new yield is earned or reinvested. Traders in rFund markets use this signal to express their expectations about future realized yield. If they expect stronger performance they buy. If they expect weaker performance or delays they sell or short.

When a fund offers scheduled or optional redemptions, RAVA receives its proportional yield in USDC through the Yield Rights Contracts it holds. Those proceeds are sent to the Treasury and used to settle open positions. If a fund compounds until maturity, RAVA tracks the growth of its value synthetically and converts it into USDC only when the fund distributes capital.

Each rFund market reflects the collective forecast of future realized yield. Prices move as traders update their expectations of how much cash the fund will generate. When the fund's verified yield is distributed, whether through redemptions, optional withdrawals, or at maturity, the RAVA Yield Index locks to that result and the Treasury settles all contracts in USDC.

This structure allows RAVA to provide continuous price discovery for even long duration and compounding RWA strategies. Every market price represents a view on real economic performance and every payout is anchored to verified yield rather than valuation models.