Total liquidity in the network

(Section: Ecosystem and Network)

1) What is "total liquidity" and why is it needed

• Speed and predictability of payments/transfers with minimal RTO/RPO.
• Efficient use of capital: less "dead balance" and double reserve.
• Interoperability between domains: bridges, banks, PSP, stables, on/off-ramp.
• Controlled risks: limits, buffers, insurance, monitoring.

2) Liquidity models

2. 1 Centralized (custodial hub)

A single "liquidity hub" holds pools by region/currency/chain. Just implement, but higher counterparty risk and SPOF risks. Suitable for start/small nets.

2. 2 Decentralized (pools by domain)

Liquidity is stored in many providers/market makers (MM), exchange - through smart contracts/channels. Higher stability, need advanced routing and on-chain rules.

2. 3 Hybrid (recommended)

Hubs for critical currencies/payouts + external MM/bridges for scaling. Management - through the policy of limits, pledges and insurance fund.

3) Topology and objects

Liquidity pools (LP): 'LP {domain, currency/asset}' with attributes: balance, buffer, limits, cost of capital (CoC), commission.
Credit lines (CL): bilateral/multilateral limits with collateral and price per use.
Bridges: lock/mint/burn/release or messaging-only + netting mechanics.
Routing edges: valid translation paths (on-us, between LPs, over bridge/bank/PSP).
Insurance fund: covers deficits within policy.

4) Key metrics and formulas

• `LD_T = Balance_T - Reserved_T`
• Utilization (U) - pool load: 'U = Used/( Balance)'

• 'CR = Available/ P95 (Demand_T) '(target ≥ 1. 5×)

• `BUF = Buffer / P95(NetFlow_daily)`
• Rebalance MTTR - median time to imbalance closure after trigger.
• Cost-to-Serve (CTS per $) - total commission/gas/spread for $ transfer.
• Payout SLA Hit Rate - share of payouts ≤ target minute/blocks.

SLO (landmarks): Payout SLA hit ≥ 98-99%; CR ≥ 1. 5×; Rebalance MTTR ≤ 30 min; CTS per $ ↓ QoQ by 10-15%.

5) Routing (SOR - Smart Order Routing)

5. 1 Purpose

Select path with minimum full cost and risk if SLA/limits are met.

5. 2 Track cost

`TotalCost = Fee + Gas + Slippage + LiquidityPenalty + TimePenalty + RiskAdj`

LiquidityPenalty: penalty for U> 70% or CR <target.
TimePenalty: for forecasted finalization/dispute window.
RiskAdj: sanction/country and counterparty risks.

5. 3 Tactics

Split routing: Divide large transfers across multiple LPs/bridges.
Pre-funding: LP precharge in peak hours.
Quote locking: fix the price for a short window, with a dynamic markup at a low CR.
Retry/alt-path: idempotent repetitions along backup paths during degradation.

6) Commissions and pricing

Base fee (bps) + priority fee at high SLAs.
Dynamic spread: grows at U> 80% or high volatility.
Tiering: lower for "good citizens" of the network (low risk, stable turnover).
Negative fee promo: to stimulate the direction with liquidity deficit (rebalance by demand).

7) Liquidity rebalance

7. 1 Triggers

Threshold: 'U> 80%' or'CR <1. 2`.
Forecast: spikes in expected demand (ML/seasonality).
Event: blocking/forks/growth of commissions in the target domain.

7. 2 Strategies

TWAP/VWAP overflows: uniform in time/volume.
Atomic swap over bridge/DEX (for tokens).
Netting: clearing of mutual obligations at the end of the window (hour/day).
Rebalance auctions: external MMs close the imbalance at the auction price.
Cross-currency hedge: hedging transactions to stabilize the USD equivalent.

7. 3 Priority policy

Money/payments> critical operational transfers> others.

8) Risk management

Run risks: surge in withdrawal requests → speed limits, dynamic spread, temporary extension of SLA.
Concentration: exposure limit per counterparty/chain/bank.
Jurisdictions and sanctions: listings, geo-restrictions, off-ramp with KYC/KYB.
Technological: bridge failure/PSP, gas price increase, dispute reorgs/windows.
Operational: key leaks, erroneous asset mappings, incorrect quotes.
Insurance: risk fund + reinsurance; transparent coverage policy.

9) Inter-chain liquidity and bridges

Trust model: preferably light-client/ZK for money; optimistic - with enlarged window.
Liquidation networks: channels/MM with HTLC/guaranteed receipts.
Pooling of stables: a single canonical register of assets, accounting for decimals, addresses, courses.
Bridge netting: butch clearing to reduce gas costs and time.

10) Compliance and audit

KYC/KYB for influencing roles and large limits.
AML/sanctions before and after translation (velocity/behavioral filters).
Audit logs and configs: signatures, unchangeable solution registers.
Data residency/PII: encryption, pseudonymization, separate storefronts.

11) Observability, SLO and dashboards

• p50/p95 Time-to-Payout, Success-Rate, CTS per $, Utilization%, CR, Backlog, Rebalance MTTR, Quote Error, Liquidity Utilization of pool.

• Payout p95 ≤ 5 min (inter-network - ≤ the final window), Success-Rate ≥ 99. 5%, CR ≥ 1. 5×, Relay/Bridge availability ≥ 99. 9%.

• Ops (час): Success-Rate, p95 TTP, U%, CR, backlog, burn-rate SLO.
• Liquidity & Cost (day): TVL/Net-flow by domain, CTS per $, fee income, insurance.
• Risk (week): exposures, sanction hits, near-run indicators, bridge failure.

12) Configuration Examples (Pseudo-YAML)

Pools and Limits Policy

yaml liquidity:
pools:
- id: "LP:EU:EUR"
min_buffer_pct: 60 max_utilization_pct: 85 rebalance_threshold:
cr_min: 1. 3 utilization_max: 0. 80 fees_bps:
base: 8 priority: 5
- id: "LP:TR:TRY"
min_buffer_pct: 70 max_utilization_pct: 80 credit_lines:
- from: "LP:EU:EUR"
to:  "LP:TR:TRY"
limit: 2_000_000 collateral: "USDC"
rate_bps_daily: 1. 5 bridges:
- pair: ["ETH", "Polygon"]
finality:
mode: light_client confirmations: 20 rate_limits:
per_minute: 300 per_hour: 12000

SOR parameters

yaml routing:
split_max_parts: 4 risk_adjustments:
utilization_penalty_bps: 25 # for every% over 70%
cr_penalty_bps: 50       # за CR<1. 2 time_penalty_ms_per_min: 5 prefer_paths: ["on-us", "light-client", "mm-auction"]

13) Sample queries (pseudo-SQL)

Loading and coating

sql
SELECT pool_id,
AVG(utilization) AS u_avg,
PERCENTILE_CONT(0. 95) WITHIN GROUP (ORDER BY demand_daily) AS p95_demand,
AVG(available) / NULLIF(PERCENTILE_CONT(0. 95) WITHIN GROUP (ORDER BY demand_daily),0) AS cr
FROM liquidity_snapshots
WHERE ts >= now() - INTERVAL '30 days'
GROUP BY pool_id;

Payout SLAs

sql
SELECT date_trunc('hour', finished_at) AS h,
100. 0 AVG(CASE WHEN EXTRACT(EPOCH FROM (finished_at - created_at)) <= sla_sec THEN 1 ELSE 0 END) AS payout_sla_hit
FROM payouts
WHERE created_at >= now() - INTERVAL '7 days'
GROUP BY 1;

CTS per $

sql
SELECT date_trunc('day', ts) AS d,
SUM(fees + gas + slippage_cost) / NULLIF(SUM(amount_usd),0) AS cts_per_usd
FROM transfers_costs
WHERE ts >= current_date - INTERVAL '30 days'
GROUP BY 1;

14) Operating Regulations

Daily: reconciliation of LP residuals, CR/U/MTTR report, automatic rebalance by peak schedule.
Weekly committee: adjustment of limits, commissions, routes; analysis of CTS and failures.
SEV incidents: a single "stop crane" for pairs of domains, public statuses, post-mortem ≤ 72 hours.
Rotation of keys and configs: signatures, timelock, rollbacks.

15) Playbook incidents

CR falls <1. 2 and growing backlog

Enable priority TWAP rebalances, raise commissions/spread, enable split-routing; notify affected partners with ETA.

Run script (mass output)

Activate speed/quota limits, temporarily increase SLA windows, use insurance fund and MM auction.

Bridge failure/finalization growth

Switch to an alternative path (messaging-only + netting or backup bridge), raise K-confirmations, update quotes.

Sanctions/AML Triggers

Freeze relevant pool/directions, manual review, compliance report, update scoring rules.

Asset/Rate Mapping Error

Stop trading on the asset, rollback of the directory, recalculation of affected transfers, public note.

16) Implementation checklist

1. Describe pools/limits/buffers and minimum CRs by domain.
2. Include SOR considering full path cost and risks.
3. Configure rebalance (threshold + TWAP/VWAP) and netting.
4. Define SLI/SLO (Payout SLA, CR, MTTR, CTS) and dashboards.
5. Start the insurance fund and MM auctions for deficits.
6. Approve compliance policy (KYC/KYB/AML/sanctions).
7. Perform chaos and stress tests (run, bridge failure, gas adhesions).
8. Regularly review commissions, routes and limits.

17) Glossary

LP (Liquidity Pool) - liquidity pool in domain/currency.
CR (Coverage Ratio) - the ratio of demand coverage by the pool.
U (Utilization) - share of used liquidity.
SOR (Smart Order Routing) - intelligent routing of payments/transfers.
TWAP/VWAP - smooth overflow strategies by time/volume.
CTS per $ - the cost of servicing $ transfer.
Run-risk - risk of massive withdrawal of liquidity.
Netting - clearing mutual obligations by batches.

Bottom line: total liquidity is a manageable system of rules, pools and routes, where capital works efficiently and payments are made quickly and predictably. By combining hybrid topology, SOR, dynamic commissions, rigorous SLOs, and rebalance discipline, the ecosystem gains sustainable, scalable, and economically optimal network liquidity.