Liquidity Token Management for Cross-Ledger Asset Pairs

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Solution Overview

Problem

Current systems for managing tokenized assets on distributed ledgers lack the ability to efficiently create and manage tokenized asset pairs that generate liquidity and revenue, and do not facilitate cross-ledger transmutation of tokens, nor do they enable fractional ownership or elastic securitization of assets.

Innovation Solution

A system and method that creates tokenized asset pairs by associating first and second asset tokens with an asset wallet address, issuing a liquidity token with a unique identifier, wrapping it to enable fractionalization, and using smart contracts for dynamic pricing and elastic securitization, allowing for cross-ledger transmutation and efficient liquidity management.

Engineering Contradictions & Design Principles

VSEngineering Contradiction Analysis

1Adaptability or versatility

If tokenized assets are managed on a distributed ledger, then asset management and tracking are improved, but the system lacks ability to create tokenized asset pairs that generate liquidity and revenue

Engineering Contradiction:

Improveability to create tokenized asset pairsVSAvoidliquidity generation capability

Core Design Contradiction:

Adaptability or versatilityVSProductivity

Solution Approach 1:

The patent combines multiple asset tokens into a single liquidity token that represents a pool of assets. This merging enables the system to create tokenized asset pairs that can generate liquidity and revenue through conversion between different asset types, directly addressing the limitation of existing systems that cannot create such paired assets.

Inventive Principle:

Principle #5Merging (Combining)

Solution Approach 2:

The liquidity token serves multiple functions simultaneously: it represents ownership of underlying assets, enables conversion between different asset types, generates liquidity through trading, and provides revenue mechanisms. This multi-functionality resolves the contradiction by making the tokenized asset system both versatile in creation and productive in liquidity generation.

Inventive Principle:

Principle #6Universality (Multi-functionality)

2Adaptability or versatility

If tokens are issued on a distributed ledger, then asset tokenization is improved, but cross-ledger transmutation of tokens is not facilitated

Engineering Contradiction:

Improvecross-ledger transmutation capabilityVSAvoidsystem integration complexity

Core Design Contradiction:

Adaptability or versatilityVSDevice complexity

Solution Approach 1:

The patent introduces bridge contracts as intermediary components that facilitate token transmutation between different distributed ledgers. These bridge contracts act as mediators that understand the token structures of multiple ledgers and enable safe conversion, thus providing cross-ledger capability without requiring direct complex integration between all ledgers.

Inventive Principle:

Principle #24Intermediary (Mediator)

Solution Approach 2:

The cross-ledger transmutation function is segmented into separate bridge contract components that can be independently deployed and managed. This segmentation allows the system to handle complexity by dividing the transmutation process into manageable units, each responsible for specific ledger interactions, thereby enabling cross-ledger capability while controlling overall system complexity.

Inventive Principle:

Principle #1Segmentation

3Productivity

If liquidity tokens are created to manage asset pairs, then liquidity provision is improved, but fractional ownership is not enabled

Engineering Contradiction:

Improveliquidity provision efficiencyVSAvoidfractional ownership capability

Core Design Contradiction:

ProductivityVSAdaptability or versatility

Solution Approach 1:

The patent segments the liquidity token into fractional shares that can be independently owned and traded. Each share represents a proportional claim on the underlying asset pair, enabling fractional ownership while maintaining the liquidity provision benefits. This segmentation allows multiple owners to hold portions of the same liquidity pool, resolving the contradiction between liquidity efficiency and fractional ownership capability.

Inventive Principle:

Principle #1Segmentation

4Extent of automation

If smart contracts are used for pricing, then dynamic pricing is improved, but elastic securitization of assets is not enabled

Engineering Contradiction:

Improvedynamic pricing automationVSAvoidelastic securitization capability

Core Design Contradiction:

Extent of automationVSAdaptability or versatility

Solution Approach 1:

The patent implements dynamic pricing through smart contracts that automatically adjust prices based on real-time market conditions and asset values. This automation resolves the contradiction by enabling the system to adapt pricing dynamically while the same smart contract framework simultaneously supports elastic securitization through programmable asset management and flexible issuance terms.

Inventive Principle:

Principle #15Dynamics

Data Source

PatentUS20240005409A1Systems, methods, and storage media for managing digital liquidity tokens in a distributed ledger platform

Publication Date: 2024.01.04 SECURRENCY INC

AI summary

A system and methods for creating and managing distributed ledger non-fungible token data structures that represent the liquidity function for any two distinct representations of assets. The representations may be different assets or a single asset type with different characteristics including ledger, network, jurisdiction, availability, etc. The liquidity function is the mechanism to transform or exchange the asset including the pricing function, fees, and delivery mechanism. The investment performance of the liquidity token can be proportional to the demand for liquidity for the pair of assets.