How Liquid is it?

Engineering Web3 Liquidity for Traditional Funds

Liquidity Management and Redemption Mechanics

Users maintain unrestricted redemption rights, converting schUSD to chUSD on demand. Chateau manages dedicated liquidity reserves through qualified custodians, with strategic allocation to cash-equivalent instruments including USDtb. Redemptions exceeding buffer capacity trigger withdrawals from the underlying Fund, with settlement cycles aligned to weekly NAV calculations and oracle updates. Assets in transit between fund and custodian are tracked separately as "Fiat in Transit" to ensure transparent reporting.

Structural Liquidity Considerations

The portfolio's private credit exposure comprises term loans across 90-, 180-, and 270-day tenors, creating inherent liquidity constraints for immediate redemptions. However, regular interest payments generate predictable cash flows that Chateau and Covenant prioritize for investor liquidity needs. Covenant VC maintains capacity to process redemptions up to 30% of NAV on short notice, supplemented by natural liquidity from maturing loans.

Secondary Market Access

Should primary liquidity provisions reach capacity, investors retain access to secondary market liquidity through decentralized exchanges. Dedicated chUSD-schUSD pools on platforms such as Uniswap provide continuous market-based liquidity solutions beyond primary redemption channels.