LTT Lifecycle Overview

A Liquid Treasury Token (LTT) is a fixed-term, over-collateralised asset.

The Liquid Treasury Token (LTT) lifecycle operates as a finite state machine that governs each issuance from creation to closure. An LTT issuance passes through several distinct phases: Pending, Funding, Active, and finally either Matured (successful completion) or one of the terminal failure states (Liquidated, Defaulted, or Canceled). Binding Machine Program strictly enforces progression through these states in order, ensuring that an LTT can only advance or terminate when specific on-chain conditions are met. Each phase represents a change in the status of the LTT contract and dictates what actions are permitted with the collateral and funds.

In a typical successful scenario, an issuance begins in Pending, moves into Funding when the scheduled start time arrives, then becomes Active after a successful raise, and ultimately reaches Matured at the end of its term. During the Pending phase, the issuance is registered on-chain and prepared for fundraising but not yet open to investors. Once the Funding window opens, investors contribute capital and receive LTT tokens, and if the raise meets the required criteria by the close of the funding period, the issuance transitions to Active. In Active state, the LTT token is fully backed by the locked collateral and the issuer’s obligation, and it remains active until the predefined maturity date.

However, there are also early termination paths defined in the state model. If an LTT fails to raise sufficient funds during the Funding phase, it enters the Canceled state and the process is aborted. If at any point during Active status the collateral’s value plummets below a safe threshold, a liquidation process can be triggered, leading to a Liquidated state. And if the issuance reaches its maturity date without the issuer repaying the owed amount, it is deemed Defaulted, meaning the issuer has failed to fulfill the obligation. Liquidated, Defaulted, and Canceled are final states that terminate the LTT before normal maturity. In all cases, the program’s state logic ensures that an LTT issuance follows one of these prescribed paths, either to successful completion (Matured) or to an early end with investors protected by the available collateral.