Economic Model
Revenue Sources
LiquitX generates sustainable revenue through multiple fee streams:
| Fee Type | Rate | Recipient |
|---|---|---|
| AMM Swap Fee | 0.30% | 80% LP / 20% Protocol |
| Management Fee | Up to 5% annually | Fund Manager |
| Liquidation Penalty | 5-15% | Liquidator + Insurance Fund |
| Lending Interest | Variable (utilization-based) | Lenders + Protocol spread |
Yield Distribution Waterfall
When funds generate returns, cash flows through a strict priority order:
LP Token Economics
Liquidity Providers receive ERC-20 LP tokens representing their pool share:
Value Accrual
- Swap fees: 80% of all trading fees compound into pool value
- Underlying yield: Senior tranche returns flow through LP tokens
- Price appreciation: As RWAs appreciate, LP token value increases
LP Token Uses
- Collateral in Lending Pool: Borrow stablecoins against LP positions
- AMM trading: Swap LP tokens for other assets
- Redemption: Burn LP tokens to withdraw underlying assets
Interest Rate Model
The Lending Pool uses a utilization-based interest rate curve:
Rate Calculation
- Utilization U = Utilization U = totalBorrowed / totalDeposits
- Base Rate: 2%
- Slope 1 (U < 80%): 4% per 100% utilization
- Slope 2 (U ≥ 80%): 75% per 100% utilization (kink model)
Rate by Risk Bucket
| Risk Bucket | Base Rate | LTV | Max Rate (95% util) |
|---|---|---|---|
| AAA | 2% | 80% | 14% |
| AA | 3% | 70% | 18% |
| A | 5% | 60% | 25% |
| RISKY | 8% | 40% | 40% |
Protocol Treasury
The protocol treasury accumulates value from:
- 20% of AMM swap fees
- Lending pool protocol spread
- Excess liquidation proceeds
- Governance penalties (if implemented)
Treasury Allocation
Real Yield Philosophy
LiquitX prioritizes sustainable economics over token-inflated yields:
| Characteristic | LiquitX (Real Yield) | Typical DeFi (Inflationary) |
|---|---|---|
| Yield source | Transaction fees + RWA cashflows | Token emissions |
| Sustainability | Perpetual (revenue-backed) | Time-limited (emission schedule) |
| Token dilution | None | Continuous |
| Value accrual | LP tokens appreciate | Farming rewards decrease |
Stablecoin Economics
Each jurisdiction operates with native stablecoins:
| Stablecoin | Peg | Collateral | Mechanism |
|---|---|---|---|
| lxUSD | $1.00 | USDC/USDT | 1:1 wrapped |
| lxEUR | €1.00 | EUROC/EURS | 1:1 wrapped |
| lxBRL | R$1.00 | ETH/stablecoins | 150% overcollateralized |