Liquidity Commitment Certificates (LCCs) are protocol-bound non-transferable assets in the Fiet Protocol that represent market makers’ verified reserve liquidity (VRL) committed to trading pools. Traded only in Fiet’s integrated DEXs, LCCs enable low-slippage swaps while keeping market makers’ reserves flexible.

LCCs combine the trust of a bank guarantee with the tradability of a warehouse receipt.

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How LCCs Work

Market makers commit VRL to a Fiet Market, creating LCCs (e.g., lcc-USDC for USDC, lcc-ETH for ETH, lcc-AUDD for AUDD, etc.) that represent on-chain collateral (e.g., 2% of the commitment) and verified reserves. Traders use LCCs to swap assets in the DEX and can redeem them for the underlying currency when needed. LCCs are protocol-bound, ensuring regulatory compliance.

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Traditional Finance Analogy

LCCs are a hybrid of a standby letter of credit and a warehouse receipt. In traditional finance, a standby letter of credit is a bank’s promise to cover funds if a seller cannot deliver, providing buyer confidence. A warehouse receipt proves ownership of stored goods, like grain, tradable in markets. Similarly, LCCs use zkTLS to verify reserve liquidity (e.g., USDC in a bank), ensuring availability without moving funds on-chain. Traders can trade LCCs like receipts, accessing liquidity with the trust of a bank-backed guarantee.

LCCs let traders tap into verified liquidity, like trading a receipt for stored goods, without locking funds.

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User Experience

Fiet integrates with next-generation AMMs like Uniswap v4 to abstract LCCs from users. Proxy pools route trades from standard asset pairs (e.g., USDC/AUDD) to LCC-based pools (e.g., lcc-USDC/lcc-AUDD), simplifying the user experience. For larger trades, if settled liquidity is insufficient, LCCs may temporarily appear in a trader’s wallet until market makers deliver the underlying capital, which automatically replaces the LCCs.

Proxy pools make LCCs invisible to users where possible, but large trades may show LCCs briefly until settlement.

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Key Features

  • Fungibility: LCCs for the same currency (e.g., Icc-USDC) are interchangeable.
  • Collateralisation: A small on-chain deposit secures commitments.
  • Non-Transferable: LCCs are restricted to Fiet’s DEX.
  • Automatic Creation: Committing VRL instantly generates LCCs.

LCCs are distinct from stablecoins, designed as bookkeeping units for Fiet’s integrated DEXs.

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Sequence Diagram

Fiet Market Structure

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Learn More

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