Three Borrowers, One Framework

2. The LP: Token Collateral Loan

The limited partner holds a token representing their fund interest. They want liquidity without redeeming. Redemption may take months, trigger tax events, or forfeit performance allocations that have not yet crystallized. Borrowing against the token preserves the LP's economic position while freeing capital.

The lender's position here is structurally weaker than in the GP facility. The lender is behind the fund's own creditors. If the fund has a NAV facility, a subscription line, or other fund level debt, all of that sits ahead of the LP's residual interest. The token represents what is left after the fund's obligations are satisfied. The lender is lending against a residual claim.

This means lower LTV. Where a GP facility might advance 50 to 60 cents on the dollar against eligible assets, an LP loan might advance 30 to 40 cents against the token's NAV. The discount reflects the lender's subordinated position, the illiquidity of the collateral, and the uncertainty around the fund's own leverage. The CVaR confidence level sets the LTV by quantifying how far the token's value could fall in a tail scenario, given the fund's underlying exposures.

3. The Acquirer: Lien Wrapped Leverage

The acquirer wants to buy a tokenized fund interest at a discount, typically during a liquidation or secondary market buyout. They need leverage to increase the size of the position they can acquire. The standard approach would be to borrow against their balance sheet, but that creates an intercreditor problem if they already have a senior lender.

The alternative: attach the capital to the asset, not to the acquirer. RAVA deposits capital into a triparty custodian alongside the acquirer's own funds. The custodian acquires the discounted tokens and wraps them into new tokens that encode RAVA's claim directly. The lien lives inside the wrapped token. There is no separate loan agreement. There is no claim against the acquirer's balance sheet.

Settlement follows a strict waterfall. When the wrapped token is unwrapped (on redemption or sale), proceeds flow in order: RAVA principal first, then any senior lender the acquirer has separately, then a profit split between RAVA and the acquirer. The acquirer's senior lender is unaffected because RAVA's capital never touched the acquirer's balance sheet.

The CVaR confidence level determines how deep the acquisition discount must be before RAVA will participate. A higher confidence level means RAVA requires a wider discount, which means more downside protection but fewer eligible opportunities.

4. One Dial Sizes All Three

The CVaR confidence level is a single parameter. It answers the question: how far into the tail distribution should protection extend? The same parameter produces different outputs depending on the borrower type, but the logic is identical. Higher confidence means more conservative terms across the board.

At CVaR 90, the GP gets a 65% advance rate, the LP borrows at 45% LTV, and RAVA will participate in acquisitions at an 8% discount. At CVaR 99.7, those numbers compress to 35%, 15%, and 16%. The confidence level is doing the same work in each case: estimating how far the underlying value could fall, then sizing the exposure so the lender (or capital provider) survives that scenario.

The numbers in the table are asset specific. A portfolio of investment grade credit funds will produce different advance rates than a portfolio of venture secondaries. The multipliers between tiers are fixed. The base discount changes with the asset. For a detailed walkthrough of how the base discount is computed, see the CVaR framework.

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