# How does the Structured Marketplace Work?

**Objective**

To create a **regulated, transparent, and economically resilient token framework** that enables institutional and DeFi-native participants to access, trade, and stake rights to the AI reinforcement learning (RL) model rental time, via two structured layers: **Senior Allocation (sAI)** and **Junior Allocation (jAI)**.

This mechanism builds on **commercial rights tokenization (CRT)** and **smart contract–enforced access**, while managing liquidity and risk with sophisticated marketplace structure design.

## **Senior Allocation (sAI) — Institutional-Grade Access Token**

**Instrument Classification**

* **Digital Receipt Token (DRT)** under **UCC Article 7**, representing enforceable rights to AI-model rental time
* Structured as an **electronic document of title**, prioritized in allocation and redemption
* Secondary classification under **Article 12 (CER)** for transfer control and enforceability

#### **Token Features**

<table><thead><tr><th width="188.95703125">Component</th><th>Specification</th></tr></thead><tbody><tr><td><strong>Token Type</strong></td><td>ERC-20 compliant receipt token (<code>sAI</code>)</td></tr><tr><td><strong>Minting Conditions</strong></td><td>KYC/KYB/AML verified participants Mintable via smart contract, subject to <strong>dynamic cap</strong> to ensure liquidity and value stability</td></tr><tr><td><strong>Liquidity Access</strong></td><td>Integrated with DEXs, with seed liquidity provisioned at launch</td></tr><tr><td><strong>Target Rate</strong></td><td>Anchored at <strong>$1 USD</strong> — soft peg enforced via VWAP-based liquidity management</td></tr><tr><td><strong>Redemption Policy</strong></td><td>Redemption processed <strong>monthly</strong>, subject to <strong>predefined redemption window</strong> and <strong>dynamic cap</strong></td></tr><tr><td><strong>Staking Option</strong></td><td>Users may stake <code>sAI</code> to receive <code>Staked sAI</code></td></tr><tr><td><strong>Staking Benefit</strong></td><td>Derived from <strong>net rental market rates</strong> generated by enterprise-level renters of AI models</td></tr><tr><td><strong>Unstaking Policy</strong></td><td>7-day cool-down period to prevent gaming and support redemption queue integrity</td></tr><tr><td><strong>Redemption Waterfall</strong></td><td>Seniority: <strong>first in line</strong> in all redemption scenarios, including liquidation</td></tr><tr><td><strong>Use Cases</strong></td><td>Enterprise-grade compute access, capital preservation, short-term liquidity needs</td></tr></tbody></table>

#### **sAI Liquidity & Price Stability Management**

<table><thead><tr><th width="160.03125">Market Phase</th><th width="164.8125">Trigger</th><th>Protocol Action</th></tr></thead><tbody><tr><td><strong>Expansion</strong></td><td>VWAP > $1</td><td>Surplus USDC from time slot rental is <strong>minted to sAI token holders</strong>, proportionally</td></tr><tr><td><strong>Contraction</strong></td><td>VWAP &#x3C; $1</td><td>USDC cash flow used to <strong>repurchase sAI from DEX</strong>, restoring peg before any new mints</td></tr><tr><td><strong>Partial Liquidation</strong></td><td>VWAP &#x3C; $0.95 (6-month average) + Model Owner Trigger</td><td>Underlying GPU/models assets partially liquidated to fulfill redemptions at $1 face value jAI layer absorbs NAV shortfall</td></tr></tbody></table>

##

## **Junior Allocation (jAI) — Volatility Absorber & High Market Rate Generator**

**Instrument Classification**

* **Residual receipt token** with exposure to **rental demand volatility**, serving as the system’s **risk absorption layer**
* Defined as a **Controllable Electronic Record (CER)** under **UCC Article 12**
* Structured to capture **surplus market rates**, while **subordinating claims** in redemption and liquidation

**Token Features**

<table><thead><tr><th width="245.26171875">Component</th><th>Specification</th></tr></thead><tbody><tr><td><strong>Token Type</strong></td><td>ERC-20 compatible <code>jAI</code> (transferable)</td></tr><tr><td><strong>Minting Conditions</strong></td><td>KYC/KYB/AML verified Dynamic cap linked to TVL of sAI and risk parameters</td></tr><tr><td><strong>Price Discovery</strong></td><td>Updated <strong>monthly</strong>, based on junior allocation and cumulative rent collection</td></tr><tr><td><strong>Redemption Policy</strong></td><td>Monthly redemption windows with dynamic pricing; subject to available surplus</td></tr><tr><td><strong>Liquidity Access</strong></td><td>No DEX liquidity Native <strong>OTC desk</strong> with <strong>limit order support</strong> via Avalon Labs</td></tr><tr><td><strong>Market Rates Mechanism</strong></td><td>Participates in residual rates after all senior obligations are met, higher potential market rates in peak demand periods</td></tr><tr><td><strong>Risk Absorption</strong></td><td>Absorbs all downside in rental demand shocks, hardware devaluation, or partial liquidation events</td></tr><tr><td><strong>Redemption Waterfall</strong></td><td>Second in priority; claims honored only after sAI fulfillment</td></tr><tr><td><strong>Use Cases</strong></td><td>venture-style exposure to AI infrastructure</td></tr></tbody></table>


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