> ## Documentation Index
> Fetch the complete documentation index at: https://docs.cargotrading.xyz/llms.txt
> Use this file to discover all available pages before exploring further.
# RWA Vault Mechanism: From the Warehouse to Your Wallet
> How a Cargo vault links each share to a receipted unit of a real-world asset: title, pledge, proof of reserve, NAV, price guards and redemption, with the Genesis Vault (West African Grade 1 cocoa) as the worked example.
Every Cargo vault share is backed by one unit of a real-world asset that already exists, sits in a named warehouse or vault, and has been signed for by an independent collateral manager. Worked examples on this page are from the **Genesis Vault**: West African Grade 1 cocoa, priced off ICE London Cocoa, issued as cvCOCOA.
## What Stands Behind a Share
Three layers: the shares on-chain, the legal title and pledge, and the physical goods under independent control.
```mermaid theme={null}
flowchart LR
subgraph CHAIN["On-chain"]
direction TB
W(["Holder wallet
vault shares · ERC-3643"]) -. "checked against" .-> IR["Identity registry
whitelisted wallets"]
end
subgraph LEGAL["Legal"]
direction TB
SPV["Vault SPV
owns every lot"]
SA["Security agent
one pledge for all holders"]
end
subgraph PHYSICAL["Physical"]
direction TB
CM["Collateral manager
sole release authority"] --> LOTS[("Receipted lots
graded · insured")]
V["Independent inspector verifies"] --> LOTS
O["Originator
10% first loss"] --> LOTS
end
W -- "1 share = 1 unit" --> SPV
SPV -- "title" --> LOTS
SA -- "pledge" --> CM
classDef key fill:#0E4A66,stroke:#5BB4DB,stroke-width:2px,color:#ffffff
classDef accent fill:#F47A20,stroke:#F47A20,color:#ffffff
class SPV,SA key
class LOTS accent
style CHAIN fill:transparent,stroke:#8A96A0,stroke-dasharray:4 4
style LEGAL fill:transparent,stroke:#8A96A0,stroke-dasharray:4 4
style PHYSICAL fill:transparent,stroke:#8A96A0,stroke-dasharray:4 4
```
> [accordion] Title
>
> A bankruptcy-remote **Vault SPV** owns every receipted lot from the moment of receipt. It has no other business and no other creditors, and every contract carries non-petition and limited-recourse terms.
> [accordion] Pledge
>
> As a backstop, the goods are pledged **with dispossession** to the collateral manager as third-party holder, and the pledge is registered. One pledge, one security agent, for all holders.
> [accordion] Custody
>
> An independent collateral manager controls the warehouse or vault and releases goods only against payment.
> [accordion] Proof
>
> An independent inspector weighs and grades every lot (Vallis in the Genesis Vault). Lot IDs, weights and grades are public, and the weekly stock report is hashed on-chain.
> [accordion] First Loss
>
> Originators keep **10% of every lot** as subordinated shares, released only when the lot is sold and reconciles. Senior cover at origination is 111%.
> [accordion] Insurance
>
> All-risks stock insurance on every lot, paid by the originator until the goods are sold.
## The Mint
**1. Deliver**
A lot of at least the vault's minimum size enters the warehouse (25 t in the Genesis Vault).
**2. Receipt**
The collateral manager weighs, grades and samples it and issues a receipt in the SPV's name (for cocoa: moisture, cut test and bean count; for gold: fineness and weight).
**3. Mint 1:1**
Shares are minted per unit: 90% senior, held for sale; 10% subordinated, held for the originator.
**4. List**
Lot ID, quantity, grade, receipt, originator and reserve price are published before the next batch window.
**The Backing Rule.** Supply can never exceed receipted units in custody, and no unit can count both as stock and as sale proceeds. The minting guard enforces this on-chain; the weekly stock report reconciles it.
**Legal Opinions.** Counsel give opinions on title, the pledge and enforcement before a vault's first mint. Investors' counsel can review them in the data room.
## NAV: A Published Reference Price, Struck Daily
Each vault's NAV starts from a published reference price for the asset, less the fixed costs of getting it to a buyer, in USD:
> [card] NAV per Share = (Reference Price − Levies − Delivery Costs) ÷ FX
>
> The reference is an exchange settlement price (ICE for cocoa, coffee and sugar) or a benchmark such as LBMA for gold.
### In the Genesis Vault: ICE London Cocoa
NAV follows the **ICE London Cocoa** settlement price for West African Grade 1 beans, less delivery costs, converted from GBP to USD. At 9 Oct 2026, NAV was **\$5.277** per share (per kg).
Genesis Vault, prices of 9 Oct 2026. NAV is restruck every day.
The trade it captures, per kilogram: farmgate **$4.522** → receipted cost **$4.793** → NAV **\$5.277**. The **10.1% spread** is the margin that normally goes to whoever exports.
**iNAV.** Between daily fixes, iNAV moves with ICE London Cocoa in real time: every minute by API and WebSocket, every 15 minutes on-chain during market hours. Creations and redemptions always strike at NAV.
## Price Guards
Every vault's NAV has the same four guards. Genesis Vault values shown:
```mermaid theme={null}
flowchart LR
A["Reference price
publishes"] --> B{"Published within
2 business days?"}
B -- "Yes" --> C{"Physical basis moved
> $250/t from 30-day median?"}
C -- "No" --> D["NAV struck
as normal"]
B -- "No" --> F["Fallback NAV
creations and redemptions pause"]
C -- "Yes" --> F
D --> E(["NAV posted on-chain"])
F --> E
classDef key fill:#0E4A66,stroke:#5BB4DB,stroke-width:2px,color:#ffffff
classDef accent fill:#F47A20,stroke:#F47A20,color:#ffffff
class D key
class F accent
```
| Guard | Rule (Genesis Vault Values) |
| :- | :- |
| Basis check | If the physical differential to the reference moves more than \$250/t from its 30-day median, NAV uses the median differential and creations and redemptions pause for that batch |
| Reference outage | No reference price for two business days: same fallback |
| Realised-price reset | Vault sales averaging more than \$150/t below NAV over 30 days re-base the cost line at once |
| Lending oracle | Lending markets read the lower of reference NAV and hedge-market-implied NAV |
Each new vault publishes its own thresholds in its term sheet.
## Redemption and Exit
| Route | Who | Price | Timing |
| :- | :- | :- | :- |
| Redemption | Holders above the vault minimum (1,000 shares in the Genesis Vault) | NAV − 0.10% | Request until 24 h before a batch; paid within 12 days in the Genesis Vault |
| Liquidity Bridge | Any holder | NAV − 1.0% | Instant, up to published capacity (\$250k at Genesis launch) |
| Physical delivery | Above a set size (10,000 shares, 10 t, in the Genesis Vault) | At cost | Ex-warehouse, to your nominated buyer or exporter |
| Creation | Authorised participants | NAV + 0.10% | Any business day, in blocks, T+1 |
Anyone can create near NAV and redeem near NAV, so a premium or discount gets arbitraged away. What remains is the asset price, which market makers hedge on ICE London Cocoa (10,000 shares ≈ one 10 t lot), and credit, which the structure bounds.
> [!NOTE]
>
> **Credit Floor, Genesis Vault.** If the cocoa ever had to be sold locally at the exporter bid ($4.70–$4.87 per kg) instead of at NAV, a senior share would still be covered at **98.9%–102.5%** of NAV, thanks to the 10% subordination.
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