Thematic Circle Protocol for Flexible Portfolio Pooling Premia
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Solution Overview
Problem
Existing asset trading systems, such as annuities and tontines, require liquidating investors' portfolios and locking assets forever, lacking flexibility and transparency, and do not effectively harness pooling premia for additional returns.
Innovation Solution
The Thematic Protocol and Circle Datastructure Apparatuses, Processes, and Systems (TPCD) introduce a Retirement Circle (TOP-RC) design that allows limited lock-ups, diversity of ages, and flexible portfolios, enabling the harvesting of pooling premia through a transparent and stable structure, with an open-source Circle Construction Protocol (CCP) and Pool Distribution Protocol (PDP).
Engineering Contradictions & Design Principles
Engineering Contradiction Analysis
1Reliability
If investors use traditional annuity or tontine designs to harvest pooling premia, then they can achieve some return enhancement, but they face inflexible lock-up periods and suboptimal returns
Solution Approach 1:
The patent segments the traditional monolithic annuity/tontine structure into modular components: (1) Circle formation with specific entry criteria, (2) Thematic portfolio construction with defined asset classes, (3) Circulation period with predetermined exit timing, and (4) Pooling mechanism for premium harvesting. This segmentation allows investors to participate in pooling premia without committing to indefinite lock-up periods, as exits are scheduled at circle dissolution points while maintaining portfolio flexibility through thematic selections.
Solution Approach 2:
The system implements dynamic characteristics through: (1) Multiple circle formation cycles allowing continuous entry and exit opportunities, (2) Thematic portfolio adjustments that adapt to market conditions while maintaining investment thesis, and (3) Staggered circulation periods that create rolling liquidity events. This dynamic structure replaces the static, single-commitment model of traditional annuities with an adaptive system that balances liquidity needs against pooling premia accumulation.
2Ease of operation
If investors seek transparent and flexible investment options to harvest pooling premia, then they can improve portfolio efficiency and attract new inflows, but they need a novel protocol framework that differs from existing systems
Solution Approach 1:
The Open Protocol framework serves multiple functions within a unified structure: (1) Circle formation rules that define entry/exit criteria, (2) Thematic portfolio construction guidelines that cover various asset classes, (3) Pooling mechanism specifications for premium calculation, and (4) Transparency requirements for investor disclosure. This multi-functional protocol provides a comprehensive solution that addresses transparency, flexibility, and pooling premia harvesting without requiring separate systems for each function.
Solution Approach 2:
The patent introduces thematic portfolios as an intermediary layer between individual investor preferences and the pooling mechanism. Investors select from predefined thematic portfolios (e.g., growth-oriented, income-generating, diversified) that aggregate individual holdings into coherent investment themes. This intermediary structure simplifies the protocol by providing standardized portfolio templates while maintaining investor flexibility through theme selection, thereby reducing operational complexity despite the novel framework.
3Productivity
If existing financial systems use traditional asset pooling mechanisms, then they can achieve some return enhancement, but they lack efficient mechanisms for flexible and transparent pooling premia harvesting
Solution Approach 1:
The system enables self-service pooling premia harvesting through automated circle formation and dissolution processes. When circles are formed with predetermined circulation periods, the pooling mechanism automatically calculates and distributes premia at exit points without requiring manual intervention. Thematic portfolios are constructed based on predefined criteria that automatically align investor selections with pooling objectives, allowing the system to self-regulate premium harvesting efficiency while maintaining strategy flexibility.
Data Source
AI summary
The Thematic Protocol and Circle Datastructure Apparatuses, Processes and Systems (“TPCD”) transforms TOP-RC search request, TOP-RC selection request inputs via TPCD components into TOP-RC search response, TOP-RC selection response, pool distribution notification request outputs. A thematic circle join request datastructure that includes a user object identifier, a portfolio object identifier associated with the user object identifier, and a thematic circle template identifier is obtained. A thematic circle object instantiated based on a thematic circle template corresponding to the thematic circle template identifier is determined. The user object identifier is added to participants datastructure. A portfolio object corresponding to the portfolio object identifier is marked as locked. A set of creation criteria associated with the thematic circle object is evaluated. The thematic circle object is activated based on a determination that the set of creation criteria has been met. A pool distribution protocol associated with the thematic circle object is initiated.