Who they are
Liquidity Providers (LPs) supply the capital that powers Aion-Fi’s merchant advances. Think of them as the credit engine behind the protocol,their funds sit in a shared pool that cycles every T+2 (two business days), earning returns from short, predictable loops tied to real card payments.
Their role in the protocol
LPs are at the center of the credit engine of Aion-fi:
- Their capital enables merchants to receive same-day payouts instead of waiting T+2.
- They earn yield from the 0.68% net return generated in each funding cycle.
- Their exposure is tied only to approved, captured transactions that will be paid by the acquirer.
- The structure keeps risk contained: short duration, daily diversification, and repayment from actual Visa/Mastercard settlements.
How LP capital is used
| Step | Description |
|---|
| 1. Pool receives liquidity | LPs deposit funds into the pool. |
| 2. Pool funds eligible merchants | Advances are made against receivables that will settle in T+2. |
| 3. Acquirer settles | Visa/Mastercard settlements arrive two business days later. |
| 4. Pool is repaid | Receivables close the cycle; capital becomes liquid again. |
| 5. Cycle repeats | Funds can be redeployed, compounding returns over time. |
How LPs earn
Each completed cycle generates 0.68% net on deployed capital (after payment-processing economics). Since cycles repeat many times per year, the effective annual return compounds with utilization and redeployment frequency.
Aion-Fi applies a 3% annual AUM fee on gross returns.
The catch? Actual returns depend heavily on utilization. Idle capital earns nothing, so the more capital that’s actively deployed each cycle, the better the effective yield. It’s not just about the per-cycle rate,it’s about keeping that capital working.
Risk and protections
The model keeps LP exposure tight and transparent. Advances are backed only by card receivables already captured,no speculation. The T+2 duration means capital isn’t tied up for months. Daily diversification across thousands of small transactions spreads risk. A 10% liquidity reserve cushions volume swings, and a structured loss absorption waterfall prioritizes LP capital protection.
What’s left? Network delays, occasional operational hiccups, chargebacks, and FX moves if flows aren’t hedged. These are edge cases, not systemic risks.
What affects net returns
A few things move the needle
| Factor | Impact |
|---|
| Utilization | More deployment = better effective yield |
| FX handling | Unhedged exposure or hedging costs eat into returns |
| On/off-ramp fees | Roughly ±0.4% per cycle, depending on payment rails |
| Liquidity reserve | 10% sits idle as a safety buffer |
| Unexpected losses | Rare: net chargebacks or operational defaults |
Who participates
Typical LPs are funds, family offices, and crypto-native allocators chasing short-duration, real-world yield. They want predictable cycles over speculative volatility. Receivables-backed credit beats unsecured lending because the collateral is real and the repayment is automatic.
In short, LPs are building a real-world, receivables-backed liquidity network for LATAM merchants,one cycle at a time.
A dedicated LP Portal with dashboards for utilization, cycle performance, and risk metrics is planned for upcoming releases.
