The Problem
Many tokenized assets do not behave like liquid crypto assets. They cannot be priced continuously. They cannot be liquidated instantly. Their valuations are slow, smoothed, and often lag underlying economic conditions by weeks or months.
This applies to real world assets (RWAs), failed lender vault tokens, distressed positions, and any tokenized asset with uncertain or illiquid underlying value.
This creates a fundamental challenge when trying to use them as collateral on chain.
Why NAV Cannot Support Lending
NAV (Net Asset Value) is an accounting concept, not a credit concept. It reflects the value that a fund reports based on appraisals, models, and smoothed marks. It does not reflect what a lender would actually recover if they had to liquidate the collateral.
In private credit, private equity, real estate, and infrastructure, NAV drifts slowly even when market conditions change rapidly. Losses appear gradually. Valuation marks are smoothed to reduce noise. Appraisals happen quarterly or less frequently.
No sophisticated lender uses NAV directly when deciding how much to lend. They adjust it.
Why Price Oracles Cannot Help
Price oracles work for liquid assets because those assets trade continuously in deep markets. There is always a bid and an ask. The spread is tight. Liquidation can happen atomically.
Most real world assets have none of these properties. There is no order book. There are no live quotes. Selling takes time, sometimes months. There is no price to put on chain.
NAV is the only number that exists. And NAV is not enough.
The Failed Vault Problem
Failed lender vaults represent an extreme case of this pricing challenge. When a lending protocol experiences losses or defaults, its vault tokens become extremely difficult to price.
The uncertainty around remaining collateral makes these tokens nearly impossible to value accurately:
Recovery processes can take months or years Collateral may be tied up in legal proceedings Final distributions are highly uncertain No reliable market exists to establish price discovery
Despite this uncertainty, these tokens still represent real claims on real assets. Traditional finance has no good answer for providing liquidity to these positions. RAVA's settlement framework can apply transparent, risk adjusted pricing to make even distressed tokenized assets tradeable.
How Traditional Finance Solves This
Every bank, prime broker, NAV lender, and repo desk that finances private assets maintains an internal settlement model. This model takes NAV and applies adjustments based on liquidity risk, appraisal lag, concentration, leverage, market stress, and structural features of the collateral.
The output of this model is the settlement value. This is the price the lender would actually settle at if the borrower defaults.
This settlement value determines everything. It sets the advance rate. It governs margin calls. It triggers liquidations.
These models are completely private. Borrowers never see them. But they are universal across the industry. ORIX has one. 17Capital has one. Blackstone has one. Goldman Sachs has one. They all work the same way, even though the details are proprietary.
The Valuation Gap On Chain
DeFi protocols cannot rely on hidden models. They require public, deterministic rules. Every participant must be able to verify that the system is behaving correctly.
This means the settlement logic that traditional finance keeps private must be reconstructed in transparent form.
That is what RAVA provides. It is the missing settlement layer that translates illiquid and uncertain asset valuations whether RWAs, failed vault tokens, or any other hard to price tokenized asset into safe, composable collateral values on chain.