The Core Idea

Illiquid tokenized assets cannot be valued using price oracles. They do not trade in liquid markets. Their NAV is reported slowly and smoothed over time. Yet these assets must still function as collateral if they are to support credit markets on chain.

Traditional finance solves this problem with settlement models. Every lender maintains an internal model that calculates what value they would settle at if a borrower defaults. This internal settlement value determines how much they will lend, when they call margin, and how they handle liquidations.

These models are proprietary. Borrowers never see them. But they are the foundation of the entire private credit market.

RAVA Makes Settlement Values Public

RAVA reconstructs the function of settlement models in transparent, programmable form.

It consumes three categories of information:

Reported NAV from fund managers The baseline accounting value that gets adjusted.

Public market signals Credit spreads, interest rate volatility, and liquidity metrics that create the dynamic adjustment component. These factors change continuously and can be hedged by sophisticated market participants.

Private risk data Verified through encrypted attestations that confirm structural facts without exposing confidential information. Legal complexity, asset structure, manager quality, and other static factors that cannot be hedged.

RAVA processes these inputs through a Model Price Oracle that generates synthetic, tradeable prices for assets without live markets. The system decomposes settlement values into two clear components:

Static Discount (S) Structural factors that are locked and non tradeable. These reflect fundamental characteristics of the asset that cannot be changed or hedged (2 to 10% range).

Dynamic Adjustment (D(t)) Market driven factors that update continuously and can be hedged using standard financial instruments. These reflect current market conditions and liquidity risk.

The settlement value formula is:

V_settlement(t) = NAV(t) × (1 − [S + D(t)])

This decomposition makes risk transparent. Market participants can see which discount components are structural versus which are tradeable, enabling informed hedging decisions.

Why This Matters

Lending protocols need to know what a position would settle at under stress. That number must be more conservative than NAV. It must update as conditions change. And it must be transparent enough to be trusted.

Without a settlement layer, every protocol builds its own internal valuation logic. This creates fragmentation, inconsistent leverage, and systemic risk.

With a shared settlement layer, all protocols reference the same valuation foundation. This enables composability, consistent credit standards, and safe leverage across the entire tokenized asset ecosystem.

The Settlement Layer as Infrastructure

RAVA is not a lending protocol. It is the valuation infrastructure that lending protocols integrate.

Just as price oracles provide spot prices for liquid assets, RAVA provides settlement values for illiquid tokenized assets. Protocols consume these values to compute LTV thresholds, margin requirements, and liquidation triggers.

This is the first time institutional grade settlement logic has been expressed in open, programmable form for tokenized assets.

Result

By turning settlement into a public layer, RAVA enables tokenized assets to become safely composable across on chain credit markets. Protocols no longer need to build their own valuation models. They integrate a shared standard that mirrors the settlement mechanics already used across traditional private credit.

Liquidity is not created through peer to peer markets. It is enabled through safe, predictable leverage built on transparent settlement values.