> For the complete documentation index, see [llms.txt](https://docs-assetfi.ecpay.io/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs-assetfi.ecpay.io/assetfi/core-concepts-and-protocol-mechanisms.md).

# Core Concepts and Protocol Mechanisms

## Tokenization of Real Assets

<mark style="color:blue;">**AssetFi**</mark> utilizes blockchain technology to tokenize real assets like real estate, bonds, and stocks. Each token represents a share of a real-world asset, offering investors the ability to diversify their portfolio with tangible value-backed tokens.

## Collateral and Loan System

Asset holders can use their tokenized assets as collateral to receive loan funds. This system not only provides liquidity but also ensures that the value of the collateralized assets remains protected. Loans are issued based on the value of the tokenized assets, with interest rates that are competitive and fair.

&#x20;

## Investment Tiers

<mark style="color:blue;">**AssetFi’s**</mark> staking service caters to two main groups of investors

* **Service Investors:** These investors aim for high returns by facilitating the circulation of funds within the AssetFi ecosystem. They take on higher risks but are rewarded with higher interest rates.

* **Small Investors:** These investors seek stable returns and are guaranteed the protection of their principal investment. They benefit from lower risk exposure and steady interest payments.

## Interest Compensation

<mark style="color:blue;">**AssetFi**</mark> guarantees an annual interest rate for all investors, with monthly interest payments. This consistent payout structure ensures that investors receive regular income, making it easier to plan and manage their finances.

### <mark style="color:blue;">ㅣ</mark>Dynamic Principal and Interest Calculation (DPIC) Mechanism

To ensure fair and accurate valuation, all investment principal and interest (compensation) are calculated based on the market value of USDT (Tether) at the time of investment and recovery. This mechanism, known as the Dynamic Principal and Interest Calculation (DPIC) Mechanism, ensures that investors are fairly compensated regardless of market fluctuations.\ <mark style="background-color:yellow;">\*DPIC : Dynamic Principal and Interest Calculation</mark>

### <mark style="color:blue;">ㅣ</mark>DPIC Mechanism Principles

* **Calculation of Staking Principal Token Recovery**\
  \ <mark style="color:blue;">**Tr = (St \* Vi) / Vr**</mark>\
  \
  **St**: Staking token quantity \
  **Vi**: Token market value at the time of staking (Value per 1 token) \
  **Vr**: Token market value at the time of staking principal recovery (Value per 1 token) \
  **Tr**: Principal token to be recovered

* **Interest Calculation (USDT = $)**\
  \ <mark style="color:blue;">**Id = ((St \*Vi)\* Ry) / 365**</mark>\ <mark style="color:blue;">**Im = Id \* Td**</mark>\ <mark style="color:blue;">**At= Im / Vc**</mark>\
  \
  **Ry** : Annual interest rate (%) \
  **Td** : Staking period (days) \
  **Vc** : Token market value reflected at the time of compensation payment (when a claim is possible) \
  **Id** : Daily interest ($) \
  **Im** : Monthly compensation amount ($) \
  **At** : Amount of token rewards paid monthlyId ($)