Smart Contract Authorization for Locked Liquidity Pool Crypto

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Solution Overview

Problem

Consumers are limited in using pooled cryptocurrency for transactions due to the currency being locked in liquidity pools, requiring them to wait for unlocking or undergo cumbersome borrowing processes, which is inconvenient and risky.

Innovation Solution

A system enabling real-time authorization of transactions using pooled equity through an inquisitor system that identifies a liquidity provider to generate a smart contract, allowing immediate transfer of locked cryptocurrency to a merchant using the provider's unlocked equity.

Engineering Contradictions & Design Principles

VSEngineering Contradiction Analysis

1Adaptability or versatility

If cryptocurrency is locked in a liquidity pool to enable trading, then liquidity provision and trading capability are improved, but the ability to use the currency for immediate transactions is worsened due to locking restrictions

Engineering Contradiction:

Improveliquidity provision capabilityVSAvoidtransaction usability

Core Design Contradiction:

Adaptability or versatilityVSEase of operation

Solution Approach 1:

The patent introduces a liquidity provider as an intermediary entity that bridges the consumer's locked pooled equity and the merchant. The liquidity provider generates a smart contract that temporarily unlocks and transfers the consumer's pooled equity to the merchant, enabling immediate transaction while maintaining the consumer's locked position in the liquidity pool. This intermediary mechanism resolves the contradiction by allowing dual usage of the same locked funds.

Inventive Principle:

Principle #24Intermediary (Mediator)

Solution Approach 2:

The system performs preliminary verification of the consumer's pooled equity balance and generates the smart contract before the actual transaction occurs. The smart contract is prepared in advance with all necessary parameters (amount, destination address, expiration time) so that when the consumer initiates a purchase, the transaction can execute immediately without waiting for manual unlocking or borrowing processes.

Inventive Principle:

Principle #10Preliminary action

2Reliability

If consumers wait for equity to be unlocked before transacting, then the security and stability of pooled equity are maintained, but the transaction speed and convenience are worsened due to waiting periods

Engineering Contradiction:

Improveequity securityVSAvoidtransaction waiting time

Core Design Contradiction:

ReliabilityVSLoss of time

Solution Approach 1:

Inventive Principle:

Principle #10Preliminary action

Solution Approach 2:

The liquidity provider acts as an intermediary that temporarily holds and manages the consumer's locked equity during the transaction process. The smart contract enables the liquidity provider to access the locked funds on behalf of the consumer for immediate transaction, while the consumer's equity remains securely locked in the pool. This eliminates the waiting time without compromising security.

Inventive Principle:

Principle #24Intermediary (Mediator)

3Ease of operation

If consumers manually borrow unlocked currency using pooled equity, then transaction capability is achieved, but the process becomes time-consuming and risky

Engineering Contradiction:

Improvetransaction capabilityVSAvoidborrowing process time

Core Design Contradiction:

Ease of operationVSLoss of time

Solution Approach 1:

The liquidity provider serves as an automated intermediary that eliminates the need for manual borrowing processes. Instead of consumers manually navigating complex borrowing procedures, the system automatically generates a smart contract that handles the entire transaction process, including the temporary unlocking and transfer of pooled equity to the merchant, significantly reducing time and complexity.

Inventive Principle:

Principle #24Intermediary (Mediator)

Solution Approach 2:

The patent replaces manual mechanical borrowing processes with an automated smart contract system. The smart contract automatically executes the transfer of pooled equity to the merchant based on pre-defined conditions, eliminating the need for manual intervention, complex forms, and time-consuming verification processes that characterize traditional borrowing mechanisms.

Inventive Principle:

Principle #28Mechanics substitution (Replace mechanical system)

Data Source

PatentUS20250390863A1Method and system for authorization for cryptocurrency on distributed ledger

Publication Date: 2025.12.25 MASTERCARD INT INC

AI summary

A method for enabling real-time authorization of a transaction with pooled equity includes: receiving a transaction request message, the transaction request message including at least a public key of a cryptographic key pair and a transacting currency amount; verifying a balance of a cryptographic currency for a first blockchain wallet associated with the cryptographic key pair on a blockchain using at least the public key, where at least a portion of the balance is locked in a currency pool; generating a smart contract, the smart contract configured to initiate a first blockchain transaction on the blockchain for transfer of the transacting currency amount from a second blockchain wallet to a destination address, where the second blockchain wallet is different from the first blockchain wallet; and transmitting the generated smart contract to a node in a blockchain network associated with the blockchain for publishing to the blockchain.