Overview

Overview

Module 2 is Parthenon Fi's institutional-grade credit product — permissioned markets enabling fixed-rate, fixed-maturity credit for both overcollateralized and undercollateralized borrowing. It is designed for institutional counterparties who require enforceable legal agreements, qualified custody, rate certainty, and secondary market liquidity for credit positions.

Module 2 comprises three integrated layers built on Canton Network:

• Credit Messaging Layer — Programmatic credit origination via RFQ matching and orderbook

• Custody Enforcement Layer — Collateral management via qualified custodians with continuous LTV monitoring

• Legal Governance Layer — Multi-Party GMSLA with Loan Position Token issuance and close-out netting

The critical architectural principle is collateral immobility: assets remain locked within custody infrastructure throughout the loan lifecycle. No transfers to third-party pools, no rehypothecation, no counterparty credit exposure for custodians.

What Module 2 Enables

For Institutional Borrowers

• Fixed-rate borrowing against crypto or RWA collateral with rate locked at origination

• Undercollateralized credit for verified counterparties via permissioned markets

• Flexible collateral types — BTC, ETH, tokenized treasuries, real estate, commodities

• Custody of your choice — select your preferred qualified custodian

• Legal certainty — GMSLA-governed with defined Events of Default and remedies

For Institutional Lenders

• Fixed-rate yield with predictable cash flows for the full loan tenor

• Custodian-held collateral with continuous LTV monitoring

• Transferable Loan Position Tokens — trade credit positions on the secondary market

• Enforceable claims — GMSLA provides title transfer or security interest mechanics

• Selective disclosure — Canton privacy means your positions are not visible to competitors

For Credit Funds and Secondary Market Participants

• Originate and distribute — create credit positions and sell LPTs to investors

• Portfolio construction — assemble diversified credit portfolios across collateral types and tenors

• Price discovery — secondary market orderbook for LPTs enables transparent credit pricing

• Structured products — mezzanine, preferred equity, and commodity-backed facilities (roadmap)

Credit Lifecycle

The Module 2 credit lifecycle flows through six phases, each touching specific system components. Each step shows Platform Activity and Custodian Activity.

1

Onboarding

Platform Activity:

• KYC/AML via custodian CDD.

• GMSLA signed.

• Wallet whitelisted.

Custodian Activity:

• Client verification.

• Account setup.

• GMSLA countersignature.

2

Origination

Platform Activity:

• Borrower/lender submit RFQ.

• PCMS matches counterparties.

• Terms confirmed.

Custodian Activity:

• Pre-authorization of collateral reservation.

• Policy engine validates eligibility.

3

Collateral Lock

Platform Activity:

• TICS issues collateral reservation instruction.

• Receives confirmation.

Custodian Activity:

• Assets encumbered — visible to borrower but transfer-restricted.

4

LPT Issuance

Platform Activity:

• Canton smart contract mints LPT, co-signed by custodian.

Custodian Activity:

• Custodian signature confirms collateral backing.

5

Monitoring

Platform Activity:

• Continuous LTV monitoring via dual oracles.

• Margin call triggers.

Custodian Activity:

• Real-time collateral health reporting.

• Cure period monitoring.

6

Settlement

Platform Activity:

• At maturity: release instruction.

• On default: liquidation instruction.

Custodian Activity:

• Release collateral on repayment.

• Execute liquidation on default.

Relationship to Module 1

Module 1 provides automated, pooled overcollateralized lending — the foundation. Module 2 adds the institutional layer: bilateral negotiation, undercollateralized credit, Loan Position Tokens, custodian-enforced collateral management, and GMSLA legal governance.

Modules 1 and 2 share the same custody infrastructure (TICS, custodian integrations) and legal framework (GMSLA). A lender can deploy in Module 1 vaults for passive yield and simultaneously trade LPTs on Module 2's secondary market for active credit portfolio management.