Protocol Integration
RAVA is clearing infrastructure, not an end user product. Lending protocols, asset managers, and treasury systems integrate RAVA to enable safe, composable credit markets for tokenized assets.
What RAVA Provides to Protocols
RAVA delivers two related but distinct values for each asset:
Collateral Value = Market Value × (1 − Haircut) Used for margin calculations and borrowing capacity. The haircut protects the system before default.
Execution Price = Market Value × (1 − Discount) Used for liquidation and standing bid settlement. The discount protects the system during default.
Protocols use collateral values for ongoing position management and execution prices when liquidation becomes necessary.
On-Chain Clearing Architecture
Clearing sits where obligations converge. In traditional finance, this is the broker level. On chain, protocols are the aggregation point at which positions are created and settled.
An on-chain clearinghouse sits between protocols and settlement rather than between users. This enables cross-protocol netting and consistent risk enforcement across the ecosystem.
The Continuous Risk Loop
Risk signals including volatility, liquidity, oracle quality, and correlation feed into a VaR engine. VaR outputs produce haircuts for collateral valuation and discounts for execution pricing. Both adjust continuously. Enforcement is automatic and bounded by rate-of-change constraints to prevent margin cliffs.
Governance defines methodology and limits rather than setting asset-specific constants. This separates risk framework design from parameter tuning.
How Protocols Integrate
Protocols consume RAVA values the same way they consume price oracles for liquid assets:
Step 1: Query Collateral Value
Protocol queries RAVA oracle with an asset identifier and receives the current collateral value (market value minus haircut) based on latest market data.
Step 2: Calculate Borrowing Capacity
Protocol applies its own risk parameters to determine maximum borrowing:
Maximum borrowing equals collateral value multiplied by the protocol's chosen LTV ratio. Different protocols can set different LTV limits based on their risk appetite.
Step 3: Monitor Position Health
Protocol checks collateralization continuously. As haircuts adjust with market conditions, collateral values update automatically, and margin requirements follow.
Step 4: Execute Liquidations
When position health falls below the liquidation threshold, the protocol liquidates using the execution price (market value minus discount). The discount ensures liquidation price is conservative and achievable under forced sale conditions.
Clearing vs Static LTV Models
Current DeFi lending protocols use static parameters set through governance. Understanding why this fails for RWAs clarifies why protocols choose to integrate Rava.
Aave with Chaos Labs
Chaos Labs produces risk signals including volatility measures and liquidity metrics. These signals inform governance decisions and parameter updates. Parameters are set through governance votes. Enforcement remains binary: position is healthy or liquidatable.
Euler Soft Liquidations
Introduces partial liquidations when health factor drops. Reduces liquidation severity but does not change the fundamental model. Risk enforcement still begins only after failure. No continuous VaR computation or gradual margin tightening.
Morpho and Compound
Similar static LTV models. Risk parameters set periodically through governance. No continuous adjustment to changing market conditions.
Rava Clearing Model
Continuous VaR estimation based on real-time market data. Haircuts adjust smoothly for collateral valuation; discounts adjust for execution pricing. No discrete liquidation threshold. Protocol always knows both the conservative collateral value (for margin) and the achievable execution price (for liquidation). Enforcement is continuous, not binary.
The Structural Difference
The difference is structural, not parametric. Static models assume risk can be captured in fixed constants. Clearing recognizes that risk is dynamic and enforcement must be continuous.
For liquid crypto assets with continuous pricing and atomic liquidation, static models work adequately. For illiquid tokenized assets with quarterly valuations and month-long exit windows, static models fail completely. This is why protocols integrating RWA collateral require a clearing layer.
Integration Patterns
Pattern 1: Collateralized Lending
Protocols like Aave, Compound, or Morpho integrate RAVA to accept tokenized asset collateral:
User deposits tokenized asset Protocol queries RAVA for settlement value User borrows stablecoins up to Protocol_LTV limit Settlement value updates trigger margin calls if needed Liquidations execute against settlement value
Pattern 2: Asset Management
Treasury management protocols use settlement values for portfolio valuation:
Track tokenized asset holdings at settlement value, not stale NAV Rebalance based on current risk adjusted valuations Report accurate portfolio values to stakeholders Integrate with existing DeFi strategies
Pattern 3: Structured Products
Index funds, tranched products, or yield aggregators build on settlement values:
Price fund shares using settlement value inputs Create senior/junior tranches with transparent risk pricing Enable instant redemptions priced at settlement value Compose with other DeFi primitives safely
Why Settlement Values Work for Integration
Standardized Interface
Every protocol integrates the same way: Single oracle call returns settlement value No custom valuation logic per asset class Consistent data format across all tokenized assets
Conservative by Design
Settlement values protect lenders: Always below estimated true value Reflect realistic liquidation dynamics Update as market conditions change
Transparent and Verifiable
Protocols can audit settlement calculations: All inputs are public or verifiably private Formula is deterministic No discretionary overrides
Composable Across Ecosystem
All protocols reference same values: Consistent leverage limits emerge naturally Cross protocol arbitrage keeps pricing tight Systemic risk is visible and measurable
Example: Isolated Lending Markets
Lending markets can accept tokenized asset collateral using RAVA settlement values:
- Market accepts tokenized assets such as private credit, real estate, or infrastructure funds as collateral
- Settlement value feed provides real time valuations
- LTV and liquidation thresholds set based on asset class
- Lenders supply capital, borrowers post tokenized asset collateral
- Settlement values update continuously
- If settlement value drops below threshold, liquidation triggers automatically
- Liquidator receives collateral at settlement value minus penalty
No custom valuation logic needed. No manual oversight. Standard protocol integration.
Example: Asset Management
A treasury holds tokenized private credit:
- Treasury tracks holdings using RAVA settlement values instead of stale NAV
- Settlement value reflects real liquidation value, adjusting for market stress
- Treasury knows true recoverable value at all times
- Can make informed decisions about rebalancing and risk management
- Stakeholders see transparent, continuously updated valuations
- No quarterly delays, no accounting lag
Network Effects
As more protocols integrate RAVA settlement values, the entire ecosystem benefits:
Deeper Liquidity
Same collateral accepted across multiple protocols creates fungibility and liquidity.
Better Risk Pricing
More data points and market participants improve settlement value accuracy.
Lower Costs
Shared infrastructure spreads development and maintenance costs.
Safer System
Consistent valuations prevent hidden leverage buildup and fragmentation risk.
Result
RAVA settlement layer transforms tokenized asset integration from a custom engineering project into a standard oracle integration. Protocols gain access to illiquid asset classes with the same safety and composability as liquid assets.
This is the missing infrastructure layer required for tokenized assets to scale across DeFi.