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DeFi Bridge ​

After the investment process, the user receives an ERC-3643 regulatory compliance token.
This token cannot be transferred to another wallet without the required legal procedures (essentially, we whitelist wallets that are allowed to receive these tokens).
This limits users' ability to transfer tokens — especially for more advanced crypto users.

Key solution: Create a wrapper similar to the Pendle model, which splits the original token into:

  • Principal Token (PT) — represents the principal (body) of the bond. This is an ERC-20 token which can be transferred without restrictions and used across the DeFi ecosystem.
  • Yield Token (YT) — represents the dividend component. This is an ERC-3643 token, with the same compliance rules as the original token.

Technical process ​

  • Step 1: The user passes legal checks (KYC, accreditation verification) and receives the ERC-3643 token after investing.
  • Step 2: Using a wrapper contract, the user can exchange the ERC-3643 token for a PT (ERC-20) and a YT (ERC-3643).
  • Step 3: The user can use PT in the DeFi ecosystem, i.e., deposit PT into a PT/USDC Morpho pool and borrow USDC stablecoins.

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  • Step 4: During dividend events, the wrapper contract receives dividends (as a holder of the original ERC-3643 token) and automatically relays them to the YT holders.

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Liquidation event on lending platforms ​

Users can be partially or fully liquidated during a liquidation event. To process liquidations, we must have an approved liquidator with sufficient liquidity to be able to repay outstanding USDC loans and hold seized PT until maturity.

  • Full liquidation event: The liquidator buys back the full PT amount with a predefined discount.
  • Partial liquidation event: The liquidator buys back part of the PT, just enough to bring the position back to a healthy state.
  • After multiple partial liquidations, the liquidator may eventually fully acquire the PT tokens.