Architecture for warehouse capital entering loan pools priced under the Ravariant Risk Methodology and its published reference metrics.
Executive summary
Rava Markets operates a lending facility against private fund LP interests. Each loan is underwritten independently by Ravariant Labs against the published value and risk metrics, secured by the fund interest (direct or tokenized), and pledged into a bankruptcy remote SPV.
Balance sheet is sourced through warehouse lines. The senior lender provides 90% of each pool. Rava Markets provides 10% first loss equity. Pledged collateral is held by a qualified custodian in segregated SPV side custody. Loan mechanics, including LTV monitoring, interest accrual, margin calls, and liquidation triggers, run on an on chain smart contract.
Rava is the servicer and the borrower side counterparty: master agreement, KYC, onboarding. The senior lender holds conditional rights under an Account Control Agreement that activate only on defined trigger events.
Key terms
Senior position90% of pool · senior in waterfall
Sponsor first loss10% of pool · Rava Markets
ServicingRava Markets
Custody (SPV side)Qualified custodian
Loan mechanicsOn chain smart contract
Senior controlConditional ACA · trigger only
Contents
Figure 1. Origination, capital flow, and token lifecycle2
Lock and register. How the pledge is recorded.3
Roles and counterparties.4
Figure 2. Default cascade and waterfall.5
Structural protections for the senior lender.6
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Figure 1. Origination, capital flow, and token lifecycle.
Token lifecycle
Notice of encumbrance · Rava register
On lock
Smart contract dispatches notice to the token issuer (forwarded to the underlying fund manager). Register entry is created with the on chain tx hash. Senior lender has live read access to the register.
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Lock and register. How the pledge is recorded.
When a position is opened, three records are created simultaneously.
01
On chain transaction.
The borrower's token transfers to the smart contract address operationally controlled by the qualified custodian on the SPV side. Recorded as a tx hash.
02
Notice of encumbrance.
Sent to the token issuer and forwarded to the underlying fund manager.
03
Rava register entry.
Records the position, borrower, smart contract address, tx hash, notice and acknowledgement, and encumbrance status.
The register is the canonical system of record. The senior lender has live read access at all times.
The token issuer acknowledges the pledge. A redemption submitted by the SPV is processed against the SPV, not the original borrower, even if the borrower attempts to redeem in parallel. Status updates (release on repay, transition on liquidation) are appended; entries are immutable once recorded.
Register entry · sample
Encumbered
Position idRVA-2026-04-001
Borrower0x7f3a · · e9b2
AssetTokenized fund interest
Token amount1,500
Loan principal$720,000 USDC
LTV at origination48%
Smart contract0xa1b2 · · c3d4
Tx hash0x3f8a · · d6e7
Notice issuerAcked Apr 28 2026
Notice managerForwarded by issuer
Senior lender accessLive · read
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Roles and counterparties.
Role
Entity
Function
Senior lender
Warehouse line provider
90% of pool. Senior in cash waterfall. Holds CONDITIONAL ACA control rights. Activate only on defined trigger events. During performing state, the SPV operates under Rava servicing.
First loss equity
Rava Markets
10% of pool. Absorbs first 10% of any pool loss before senior. Sponsor first loss capital ranks junior to senior in the waterfall.
Servicer
Rava Markets
Single bilateral master agreement with each borrower. Handles KYC, accreditation, onboarding, and ongoing servicing during performing state. The qualified custodian does not interact with borrowers; Rava intermediates.
Borrower
Borrower
Holds the tokenized fund interest. Pledges it as collateral, receives the loan. Recourse limited to the pledged token (non recourse).
Borrowing SPV
Rava SPV (per facility)
Bankruptcy remote vehicle. Holds collateral. Owes senior. Routes interest waterfall. Segregated per facility, no cross collateralization.
Credit underwriter
Ravariant Labs
Independent. Sets advance rate, coupon spread, covenant triggers, and liquidation path per published methodology. Reviewed under model governance.
Qualified custody (SPV side)
Qualified custodian
Holds the pledged token in segregated SPV side custody account. Does not interact with borrowers. Operates per SPV instructions during performing state. Steps in for the senior lender only when ACA triggers fire.
Smart contract
On chain enforcement layer
Continuously monitors LTV. Accrues interest. Issues margin calls and triggers liquidation per the underwriting covenant package. Operationalizes the legal agreements; auditable and deterministic. Replaces the operational role of a traditional tri party custodian.
Token issuer
Issuer / wrapper
Wraps the underlying fund LP interest as a transferable on chain token.
Underlying fund
Fund manager
Generates the actual yield. Subject to its own audit, administrator, and regulatory regime.
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Figure 2. Default cascade and waterfall.
01
LTV breach detected
Smart contract monitors loan balance against token NAV continuously. Oracle: administrator NAV plus Ravariant dynamic stress signals. SPV operates under Rava servicing. Senior lender does not yet have control.
02
Margin call issued
Rava notifies the borrower under the bilateral master agreement. Borrower has 5 to 30 days to add collateral, pay down loan, or refinance. Cure period and step structure per Ravariant covenant package.
03
Liquidation triggered
On uncured margin call OR hard cap LTV breach (75%), the smart contract triggers liquidation. The pledged token is moved into the SPV side liquidation account at the qualified custodian.
04
SPV liquidates collateral
Redemption submitted to the fund wrapper (typical 30 to 60 day cycle), or sale in secondary market if a liquid market exists. SPV is still under Rava servicing during this window.
05
Waterfall
Recovered cash repays senior debt first (warehouse line plus accrued interest). Rava Markets first loss absorbs any shortfall up to 10% of pool. Residual returns to borrower.
06
ACA control trigger. Senior steps in as servicer.
Trigger: a foreclosed asset that cannot be liquidated within 12 months from foreclosure. Senior lender steps into servicer role and directs the resolution path. Rava's 10% first loss capital remains in the SPV, junior in the waterfall. Recovered cash repays senior first; first loss absorbs any shortfall before senior takes loss. Control transfers; capital position does not.
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Structural protections for the senior lender.
01
10% first loss buffer
Rava absorbs the first 10% of any pool loss before the senior takes a dollar. Sized to the worst observed peer loss in the published Ravariant methodology, with a margin of safety.
02
Bankruptcy remote SPV per facility
No reach through from the Rava parent to facility collateral. Each warehouse line gets its own SPV. No cross collateralization between facilities.
03
Independent credit underwriting
Advance rate, coupon spread, covenants, and liquidation triggers are set by Ravariant Labs per its published methodology, not by Rava commercial teams. The methodology is publicly versioned and reviewed quarterly under model governance.
04
Qualified SPV side custody
A qualified custodian holds the pledged token in segregated SPV side custody. The custodian does not deal with borrowers; Rava handles that side. ACA grants the senior lender conditional control rights, equivalent to traditional fund finance regulatory capital treatment.
05
Smart contract enforcement
Eliminates the operational drag of a traditional tri party custodian (typically 6 to 12 weeks of setup and 50 to 150k per year of overhead per facility). LTV monitoring, interest accrual, and liquidation triggers run on chain. Auditable and deterministic; chain agnostic.
06
Conditional ACA. Control transfers, capital does not.
During the performing state the SPV operates under Rava servicing. The senior lender ACA control rights are dormant until a defined trigger fires (uncured margin call, hard cap LTV breach, or a foreclosed asset that remains unliquidated after 12 months). On trigger, the senior steps into the servicer role and directs the resolution path. Rava's 10% first loss capital remains in the SPV, junior in the waterfall. Recovered cash repays senior first; first loss absorbs any shortfall before senior takes a dollar of loss. Control transfers; capital position does not.
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