Launch an institutional product

Digital representation can improve how an investment product is issued, administered, transferred and distributed. It does not by itself change why an investor would own the product, and it does not create a new source of demand.

This page is about adding one.

Note

This is a joint design exercise rather than a product you can switch on. The first step is a bounded pilot around a single existing product, not a broad launch.

The contract

You bring	An existing digitally represented fund or asset interest, and the distribution you already have.
Mayflower provides	A companion market whose reserve is your asset, issued through primary subscription so new capital can land in your fund.
Your investors get	Exposure to the underlying asset, plus a demand-sensitive premium above a floor denominated in that same asset.
You earn	Your ordinary fee, while the demand-sensitive risk stays outside your fund.

Your fee arrangement does not change. What changes is where the demand-sensitive risk sits. The fund keeps its mandate and its valuation process, while the premium above the floor, and the possibility of that premium contracting, belong to the companion product.

The separation is useful rather than absolute. Legal, accounting, brand, distribution and operational risks can still connect the two products, and the partnership design has to name those connections rather than assume them away.

Any share of the companion market’s own fees, whether on issuance, redemption or Reserve Value Access, is a matter for the partnership terms and is not set here.

The mechanism

Your asset becomes the reserve asset for a separate reserve-backed asset. Investors acquire the reserve-backed asset through primary issuance. Their contributions are credited to a dedicated reserve, and the market issues units according to a deterministic, supply-dependent price schedule.

The direct flow is:

reserve asset contributed
        ↓
liquid reserve increases
        ↓
new units issued

Connected to your primary-subscription system, it becomes:

eligible investor capital
        ↓
new subscription into the underlying product
        ↓
underlying units delivered to the reserve
        ↓
new units issued

In that structure, net primary demand funded by outside capital can become demand for your underlying product. The market is then more than a secondary venue. It can become a subscription channel.

What the investor owns

The reserve-backed asset carries a marginal protocol price denominated in the reserve asset, and a minimum redemption value denominated in the same reserve asset.

The investor holds two distinct exposures: performance of the underlying reserve asset, and the change in the reserve-backed asset’s value relative to that reserve asset. These multiply.

The market does not increase the contractual yield of the underlying asset. It creates a separate demand-sensitive payoff above a reserve-backed floor.

The AVM does not manufacture yield. It creates a new payoff.

Reserve Value Access

A holder may place units under encumbrance and receive the market’s reserve asset up to the position’s minimum redemption value.

The amount received becomes a fixed claim against the position’s floor value. It does not accrue interest, carry a maturity date, require scheduled repayment, or create personal recourse. The holder may return reserve assets at any time to reduce the claim and restore the corresponding units.

As the floor rises, the fixed claim does not change. It occupies a smaller portion of the position, and available capacity increases.

This is not without risk. The residual position can be exhausted if the market contracts to its floor.

Why a manager would consider it

A subscription channel. When issuance is connected to primary subscription, net new outside demand for the companion product can create new underlying units.

A different investor. The underlying product may appeal to investors seeking income, diversification or a defined exposure. The companion product can appeal to investors seeking a demand-sensitive payoff above a floor.

Reserve demand that persists. Primary issuance places underlying units in the reserve. The durable claim is a continuing reserve function tied to outstanding obligations, rather than permanent physical lockup of every contributed unit.

Capital access inside the product. Reserve Value Access works against the market’s own minimum redemption value. It does not require a third-party lending market to supply funding or set liquidation terms.

Mandates stay separate. The underlying asset keeps its existing investment mandate and valuation process. The demand-sensitive premium and its contraction risk sit in the companion product. This is the one benefit on the list that does not depend on the premium being attractive, because it holds from the first day whatever the companion market does. It is also not absolute: see the note on connected risks above.

What remains at risk

The floor is denominated in the reserve asset, not in dollars. If the reserve asset is impaired or loses external value, the external value of the floor falls with it.

For an illiquid underlying, the floor inherits your own valuation. The floor is stated in reserve units. Where those units are a fund interest marked by its own manager rather than an exchange-traded asset, the floor’s value in any external currency depends on that valuation process. A gold or index reserve has an independent price; a private credit interest does not.

The premium above the floor is not protected. It can contract completely, and whether it exists at all is a market question rather than a protocol one.

Reserve Value Access can amplify loss of the residual position. Recursive use can create substantial effective exposure and requires explicit limits, disclosures and suitability controls.

The reserve may become a concentrated holder of the underlying asset, and may affect circulating supply and redemption patterns.

Classification is not determined by the economics. Legal, accounting, tax, custody, eligibility and regulatory treatment depend on the final product and the jurisdiction. The design of the market does not settle any of them.

See Risk for what the floor guarantee covers in general.

What a first engagement looks like

The appropriate first step is a joint design exercise around one existing product, answering:

1. Which investor segment would choose the companion product rather than the underlying one?
2. Can issuance be connected to primary subscriptions?
3. How will subscriptions, redemptions, reserve ownership and reporting operate?
4. Which eligibility and transfer restrictions must be preserved?
5. What limits should apply to issuance, concentration and Reserve Value Access?
6. What legal, accounting, custody, tax and regulatory work is required?
7. What evidence and controls are needed for a limited pilot?

The result should be deliberately bounded: one reserve asset, one investor category, capped issuance, conservative access limits, and defined operating and termination procedures.

The shared machinery

Every integration under Solutions uses one primitive. A market prices itself from a deterministic curve, holds a reserve equal to the area under that curve, and acts as the counterparty to every trade. There is no order book, no external market maker, and no pool anyone has to seed. Each market carries a floor: a guaranteed minimum redemption price that can rise and cannot fall, denominated in the market’s reserve asset.

See The Assured Value Machine for the mechanism.

Talk to us

If you issue or distribute a digitally represented asset and want to work through whether this applies to it, get in touch.