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Withdraw

This section provides a detailed overview of the withdrawal processes in the FRAG-22 Fund Module. It outlines the full lifecycle of a withdrawal—from request initiation and validation to batch processing, liquidity checks, asset rebalancing, and final settlement. It explains how withdrawals are queued, managed, and prioritized to ensure efficient liquidity management and reliable user fund distribution.

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Structure of the Fund Module in Withdrawal Context

Withdrawal Queue:

  • A dedicated system that temporarily stores all user withdrawal requests.
  • Each request includes:
    • User ID
    • Requested amount and asset type
    • Timestamp and status

Withdrawal Batches:

  • Periodically processed groups of queued withdrawal requests.
  • Requests are not immediately settled but grouped and processed at scheduled intervals to maintain liquidity stability and minimize transaction fees.

Liquidity Reserve:

  • A pool of readily available assets maintained within the Fund to quickly fulfill withdrawal requests.
  • Sized strategically—large enough for average withdrawal demand but not excessive to avoid inefficient capital allocation.

Yield Sources:

  • Investment strategies where Fund assets are allocated to generate additional returns (e.g., liquidity pools, lending markets).
  • These sources provide returns but may have varying liquidity and withdrawal timeframes, influencing withdrawal speed.

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Detailed Withdrawal Procedure

This section describes the detailed step-by-step procedure of withdrawal management within the architecture context, aiding developers and stakeholders in clearly understanding system behaviors before examining the underlying implementation.

Step 1: Withdrawal Request Initiation

  • User Action:
    • The user initiates a withdrawal request specifying the asset and the amount desired.
  • Fund Module Action:
    • Immediately validates the user’s current asset balance.
    • Upon successful validation, logs the request in the Withdrawal Queue with a timestamp, user identifier, asset type, and amount.
    • Confirms the queuing status back to the user.

Step 2: Withdrawal Queue and Batch Formation

  • Accumulation:
    • Withdrawal requests accumulate within the Withdrawal Queue until reaching predefined processing criteria:
      • Scheduled time intervals (e.g., daily batches).
      • Accumulated request thresholds (total requested amounts).
  • Batch Creation:
  • At the trigger point, accumulated requests are grouped into a Withdrawal Batch.
  • Batch maintains requests’ original submission order (FIFO – first-in-first-out).

Step 3: Liquidity Reserve Verification

  • Liquidity Assessment:
    • The Fund Module assesses available liquidity in the internal reserve.
    • Decision points based on reserve evaluation:
      • Immediate Settlement: Reserve assets are sufficient; funds are disbursed immediately.
      • Rebalancing Required: Insufficient reserve liquidity; additional processes are triggered.
  • Batch Status Update:
    • Updates each request in the batch, marking them either “ready for immediate settlement” or “pending due to rebalancing.”

Step 4: Asset Rebalancing Procedure (if required)

  • Asset Retrieval from Yield Sources:
    • Initiates withdrawals from external yield sources, prioritized by liquidity availability (shortest withdrawal periods first).
  • Prioritized Fulfillment:
    • Withdrawal requests delayed due to liquidity constraints are prioritized by timestamp within their batch.
  • Continuous Updates:
    • Users are notified regularly about estimated fulfillment timelines and any delays incurred due to asset rebalancing.

Step 5: Final Batch Settlement

  • Withdrawal Fulfillment:
    • Upon successful rebalancing, the liquidity reserve is replenished.
    • Requests marked as pending are processed sequentially according to their original queue order.
  • Settlement Confirmation:
    • Funds are transferred to user accounts.
    • Batch status is updated to “completed,” closing the batch processing cycle.
  • User Notification:
    • Confirmation of successful withdrawal is sent to users.

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Withdrawal Timing Variations

Withdrawal processing times can vary based on liquidity status:

  • Immediate Liquidity (Fastest):
    • Processed quickly at scheduled batch intervals (minutes to hours).
  • Short-Term Rebalancing (Moderate Delay):
    • Minor liquidity constraints resolved within hours to days through high-liquidity yield sources.
  • Long-Term Rebalancing (Extended Delay):
    • Major liquidity constraints require withdrawal from longer lockup yield sources, potentially delaying settlement from days to weeks.