smart contracts

Overview

Parthenon Fi's smart contracts are written in Daml (Digital Asset Modeling Language) and deployed on Canton Network. Daml is a purpose-built language for multi-party workflows in regulated environments — providing type safety, explicit authorization models, and privacy by construction.

Why Daml (Not Solidity)

Property	Solidity (Ethereum)	Daml (Canton)
Privacy	All state public	State shared only between parties
Authorization	Caller-based (msg.sender)	Explicit multi-party signoff
MEV	Vulnerable to front-running	No MEV — no global mempool
Formal verification	Partial tooling	Built-in verification support
Regulatory compliance	Bolted on	Native — programmable compliance
Settlement	Sequential transactions	Atomic multi-party settlement

For institutional credit infrastructure, Daml's authorization model is critical. Every state transition requires explicit authorization from all affected parties — ensuring that no single party can unilaterally alter loan terms, collateral status, or LPT ownership.

Contract Templates

Loan Contract

The core contract governing a credit relationship:

Loan template

template Loan
  with
    borrower    : Party
    lender      : Party
    custodian   : Party
    platform    : Party
    principal   : Decimal
    baseAPR     : Int        -- basis points
    tenor       : Int        -- days
    maturityDate: Date
    collateral  : CollateralRef
    ltvThresholds: LTVThresholds
    gmslaRef    : Text       -- hash of governing GMSLA
    status      : LoanStatus

Key choices (actions) on the Loan contract:

• Execute: Requires authorization from borrower, lender, custodian, and platform

• MarginCall: Triggered by platform when LTV exceeds threshold. Requires custodian acknowledgment.

• Cure: Borrower deposits additional collateral. Requires custodian confirmation.

• Liquidate: Triggered by platform when cure fails. Requires custodian execution.

• Repay: Borrower repays at maturity. Requires custodian confirmation of receipt.

• Release: Platform instructs collateral release. Requires custodian execution.

LPT Contract

The Loan Position Token contract:

LoanPositionToken template

template LoanPositionToken
  with
    holder        : Party
    loanRef       : ContractId Loan
    principal     : Decimal
    baseAPR       : Int
    tenor         : Int
    maturityDate  : Date
    collateralRef : CollateralRef
    custodianSig  : Text
    transferability: Transferability
    gmslaRefHash  : Text

Key choices:

• Transfer: Transfers the LPT to a new holder. Requires holder authorization and (if transferability = KnownLenders) verification that the transferee is a Known Lender.

• Burn: Burns the LPT upon loan repayment or liquidation. Requires platform authorization.

CollateralRef

A reference to the custodian-held collateral:

CollateralRef data type

data CollateralRef = CollateralRef
  with
    custodianId     : Text
    reservationId   : Text
    collateralType  : AssetType
    amount          : Decimal
    lockConfirmation: Text
    custodianSignature: Text

This structure ensures that every on-chain reference to collateral is backed by a verifiable custodian confirmation.

Authorization Model

Daml's authorization model requires explicit consent from all parties affected by a state transition:

Action	Required Signatories
Loan execution	Borrower + Lender + Custodian + Platform
Margin call	Platform + Custodian
Cure (additional collateral)	Borrower + Custodian
Liquidation	Platform + Custodian
Repayment	Borrower + Custodian
LPT transfer	Current holder + (Platform for KYC verification)
LPT burn	Platform

No single party can unilaterally change the state of a loan or LPT. This is enforced at the language level — not by convention or governance.

Compliance Integration

Compliance checks are embedded in Daml contract logic:

• KYC verification: Before any party can sign a Loan or LPT contract, their KYC status is checked against the platform's verified counterparty registry

• Sanctions screening: At every counterparty interaction point, the contract checks the party's sanctions status via the Chainalysis/TRM Labs integration

• Jurisdictional restrictions: Transfer restrictions prevent LPTs from being transferred to parties in prohibited jurisdictions

• Transfer controls: LPT transferability rules are enforced in the Transfer choice — not just by convention

Audit Trail

All contract state transitions are recorded on Canton Network with:

• Timestamps

• Party authorizations

• Previous state references

• TICS instruction/confirmation references

This audit trail is accessible to supervisory nodes (for regulators) and to the platform for compliance reporting — without exposing transaction details to non-relevant parties.