💱 Flow of Funds
This diagram illustrates the complete lifecycle of user funds inside RWAlpha vaults and highlights every participant involved—from the user to vault contracts, custodians, asset managers, and tokenization partners.
Lifecycle Overview
Step-by-Step Breakdown
1. Vault mints tokens when users deposit stablecoins
Users deposit pUSD and receive ERC-20 vault tokens that represent their share of the vault. These tokens appreciate in value as yield is accrued.
2. Vault allocates capital into tokenized assets
The vault deploys funds into regulated, tokenized RWAs such as:
U.S. Treasuries
ETF-based yield products
Credit or debt instruments
3. Custodians safeguard underlying assets
All underlying cash and securities are held by independent, institution-grade custodians, not RWAlpha. These custodians maintain regulatory oversight and ensure proper asset handling for yield generation.
4. Asset managers execute yield strategies
Regulated asset managers allocate the capital into strategies that may include:
Short-duration U.S. Treasuries
Public-market ETFs
High-quality debt instruments
Other yield-bearing financial products
5. Tokenization partner returns yield to the vault
The tokenization provider collects yield or dividends from the asset manager's positions and streams those payments back into the vault.
6. Vault token value increases as yield accumulates
When income flows back into the vault, the total asset value rises—causing each vault token to appreciate proportionally.
7. Users redeem whenever they choose
Users can redeem their vault tokens for the underlying stablecoins, receiving both their principal and the yield that has accrued.
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