Key Concepts

This page defines the core concepts and terminology used throughout Parthenon Fi's documentation.

Loan Position Token (LPT)

A non-rebasing token issued on Canton Network upon loan execution. Each LPT is co-signed by the custodian and encodes: principal amount, base APR, tenor, collateral type and value, custodian identity, LTV thresholds, and GMSLA reference hash. LPTs are the on-chain representation of a credit position.

If marked as transferable, LPTs can be traded on the secondary market — but any transferee must complete KYC/AML via a custodian, execute the Multi-Party GMSLA, and be verified as a Known Lender. Transfer of an LPT transfers all legal rights under the MLA.

GMSLA (Global Master Securities Lending Agreement)

The ISLA GMSLA 2010 is the industry-standard master agreement for securities lending, used by major banks and institutional investors worldwide. Parthenon Fi uses a Multi-Party version adapted with the Digital Assets Annex (August 2024, Clifford Chance) to cover Asset-Backed Digital Assets, Platform Transferred Securities, and Digital Cash.

Participants sign the GMSLA once at onboarding. Each subsequent loan references this master agreement through the Loan Position Token, eliminating per-transaction documentation.

Custody-Native

Parthenon's architecture is "custody-native" — meaning collateral is held at qualified custodians (not in smart contracts) throughout the entire loan lifecycle. The protocol issues instructions to custodians via TICS but never takes possession of or control over client assets. This is the same model used by institutional prime brokerages, adapted for blockchain-native settlement.

TICS (Transaction Instruction & Confirmation System)

The programmatic bridge between Parthenon Fi's smart contracts and custodian APIs. TICS issues instructions for collateral reservation, lock, monitoring, margin calls, release, and liquidation. It receives real-time confirmations from custodians and maintains independent LTV calculations as a secondary verification layer.

Account Control Agreement

A tri-party agreement between Borrower, Lender, and Custodian governing: collateral lock and encumbrance, continuous LTV monitoring, margin call execution, liquidation procedures, and collateral release upon repayment. This is the legal instrument that gives the custodian authority to act on TICS instructions.

LTV (Loan-to-Value Ratio)

The ratio of the outstanding loan principal to the current market value of the collateral. Parthenon uses three LTV thresholds:

• Initial LTV: Set at origination (typically 50% for crypto, higher for RWA). Determines the required collateral deposit.

• Margin Call LTV: When LTV rises to this threshold (default 70%), a margin call is issued. Borrower must cure within the Cure Period.

• Liquidation LTV: When LTV reaches this threshold (default 85%), the custodian is authorized to liquidate sufficient collateral to restore LTV.

Atomic DvP (Delivery versus Payment)

A settlement mechanism where the delivery of an asset and payment occur simultaneously as a single atomic operation. On Canton Network, this means the borrower receives principal and the lender receives the LPT in a single indivisible transaction — eliminating settlement risk.

Known Lender

A participant who has: (1) completed KYC/AML verification via a custodian, (2) executed the Multi-Party GMSLA, and (3) been whitelisted through Parthenon's permissioning system. Only Known Lenders can hold LPTs or participate in lending markets.

Close-Out Netting

A legal mechanism under the GMSLA that allows, upon an Event of Default, the non-defaulting party to terminate all outstanding transactions and calculate a single net amount owed. This significantly reduces credit exposure in multi-transaction relationships.

Canton Network

The enterprise blockchain developed by Digital Asset, designed for regulated financial services. Canton provides sub-transaction privacy (each party sees only the data relevant to them), atomic settlement, and programmable compliance. The network is backed by DTCC, Goldman Sachs, BNY, JPMorgan, Nasdaq, and S&P Global.

RFQ (Request for Quote)

The primary origination mechanism in Module 2. A borrower or lender submits desired term sheet parameters (principal, rate, tenor, collateral type) and the PCMS matches counterparties with compatible preferences. Unlike AMM-based DeFi, RFQ enables customized, bilateral credit negotiation.

Title Transfer vs. Security Interest

Parthenon supports two collateral models under the GMSLA:

• Title Transfer (GMSLA 2010): Full ownership of collateral passes to the lender (via custodian as agent). Borrower retains a contractual right to equivalent collateral upon repayment. Simpler to enforce but involves transfer of ownership.

• Security Interest (GMSLA 2018): Lender receives a security interest in the collateral without ownership transfer. Borrower retains title. Preferred by certain institutional counterparties for regulatory or accounting reasons.