Pool creation

Creating a liquidity pool for tokenized real-world assets is a complex but essential process in decentralized finance. This process allows investors to gain exposure to tangible assets through blockchain technology, providing opportunities for stable yields and portfolio diversification. By leveraging smart contracts, blockchain deployment, and meticulous asset pairing, platforms like Svim Finance can facilitate the seamless integration of real-world assets into the crypto ecosystem. Here’s a detailed breakdown of how this process works:

Pool-Asset Pairing

Each investment pool is meticulously paired with a specific type of tokenized real-world asset, often originating from a particular borrower or asset issuer. These pools can be structured as either open-ended, allowing for continuous investment and redemption, or close-ended, with a fixed duration and capital limit. Typically, the pools are overcollateralized with high-quality assets to ensure stability and minimize risk. These assets undergo rigorous legal provisioning, comprehensive due diligence, and operational readiness assessments. Key functions such as investor KYC (Know Your Customer), KYB (Know Your Business), AML (Anti-Money Laundering), and integrated crypto-fiat services are either built into the system or readily available to ensure compliance and operational efficiency.

Pool Coding Development

The development phase involves creating robust and secure smart contracts to manage the liquidity pool. These smart contracts are thoroughly audited to ensure their reliability and security. They handle all aspects of the liquidity pool, including the execution of token transactions, the provisioning of liquidity, and the distribution of rewards to liquidity providers. The audit process is crucial to identify and mitigate any vulnerabilities, ensuring that the contracts perform as intended without exposing the pool to unnecessary risks.

Deployment on Blockchain

Once the smart contracts are developed and audited, they are deployed on a chosen blockchain network, such as Ethereum, Binance Smart Chain, or another suitable platform. This deployment involves uploading the smart contracts to the blockchain and initializing the liquidity pool with the tokenized assets and the initial liquidity. The choice of blockchain is critical as it affects transaction speed, costs, and overall security. A well-established blockchain network can provide the necessary infrastructure to support the liquidity pool's operations and ensure seamless interactions for all participants.

Initial Pool Funding

The initial funding of the liquidity pool is a crucial step. It involves providing the pool with the newly created tokens that represent the tokenized real-world assets, alongside a pairing cryptocurrency, typically a stablecoin like USDC (USD Coin). This pairing creates a trading pair, allowing users to exchange between the tokenized assets and the stablecoin. Investors can allocate their capital to the pool and acquire RWA investment positions, which are represented by liquidity pool tokens. These tokens entitle investors to a share of the pool's rewards and provide liquidity to the underlying assets, facilitating smooth trading and investment operations.