> For the complete documentation index, see [llms.txt](https://sovavault.gitbook.io/docs/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://sovavault.gitbook.io/docs/sova-for-users/flow-of-funds.md).

# Flow of Funds

## From Deposit to Redemption: How Your Capital Moves

Sova provides a **clear, auditable path** from crypto deposit to off-chain investment and back - combining smart contract enforcement with institutional-grade execution.

*Here's what happens behind the scenes.*

***

### 1. Deposit Into Vault

You begin by depositing **BTC or USDC** into a Sova vault via your wallet.

* Funds are held in a **smart contract queue**
* If you're depositing BTC, it's converted into USDC via a regulated partner
* All assets are secured by **Sova's Conduit contract**, which safely manages custody handoff

***

### 2. Off-Chain Transfer & Fiat Conversion

Once deposits are confirmed:

* USDC is transferred to a **licensed Yield Curator**
* Crypto is off-ramped into fiat through regulated entities (e.g. Circle)
* The funds are now in a position to be deployed into real-world investments

> 🏛️ **Regulatory Compliance**
>
> All fiat movement occurs through **regulated banks, custodians, or brokers**, depending on the strategy.

***

### 3. Investment Execution by the Yield Curator

The Yield Curator executes the strategy using the capital received:

* **Allocates** into financial instruments (e.g. treasuries, corporate loans, ETFs)
* **Manages** portfolio construction, risk, and reporting
* **Holds assets** in custody with institutions like BNY Mellon, Fireblocks, etc.

***

### 4. On-Chain NAV Reporting

As the portfolio earns yield or appreciates:

* The **NAV (Net Asset Value)** of the strategy is updated periodically
* Sova's **Reporter contract** posts the new valuation to the vault on-chain
* Your tRWA token now reflects the new, higher value

> 💡 **Key Insight**
>
> Your token balance stays the same, but the **redeemable value increases** over time.

***

### 5. Redemption & Settlement

When you choose to exit:

#### Step-by-Step Process:

**1. Request Submission**

You submit a **withdrawal request** in the Sova app

**2. Queue Processing**

Your request is queued and processed at the next **redemption window**

**3. Asset Liquidation**

The Yield Curator liquidates assets and returns fiat to the on-ramp partner

**4. Crypto Conversion**

Fiat is converted back to USDC (or BTC, if applicable)

**5. Token Burn & Payout**

You **burn your tRWA token** and receive your crypto

> ⏱️ **Timing Varies by Strategy**
>
> Some strategies offer quicker liquidity (e.g. within **1–3 days**), while others may have longer cycles (up to **30+ days**) depending on the underlying assets.