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RWAs against cash

FLOW B — Post cash. Borrow the RWA.

A borrower posts stablecoin collateral into a ring-fenced margin account and borrows actual RWA tokens from a separate inventory vault.

  1. Deposit eligible stablecoin collateral.
  2. Borrow available RWA inventory.
  3. Use or transfer the borrowed RWA subject to the asset's transfer rules.
  4. Interest accrues in the borrowed RWA or according to the market's configured accounting model.
  5. Repay the RWA plus accrued borrow cost to release collateral.
  6. If the position becomes unsafe, the protocol can use collateral to buy the RWA back and return inventory to the vault.
Health_B = stablecoin collateral / (RWA debt × RWA price × liability factor)

A higher RWA price increases the liability and reduces health.

Borrower cash collateral is margin. It should not also be spent to manufacture the RWA inventory being lent.

Why borrow the RWA?​

  • Hedging or short exposure.
  • Arbitrage across venues.
  • Market making and inventory management.
  • Temporary delivery needs without permanently purchasing the asset.