Executive Overview
UFX Protocol: Business Guide
The Universal Fund Exchange (UFX) is an institutional-grade blockchain protocol that enables compliant secondary trading of tokenized fund shares.
What Problem Does UFX Solve?
Need Liquidity
Ability to exit positions before fund redemption windows. Trade 24/7 on secondary market.
Need Compliance
Must verify accreditation, residency, and exposure limits. All automated on-chain.
Needs Fair Pricing
Trades should reflect current NAV, not speculation. Pricing bounds enforce discipline.
Key Benefits by Role
Provide Liquidity Without Running Trading Desk
✓ Maintain compliance control over all secondary trades
✓ Collect fees on secondary market activity
✓ Integrate with existing transfer agent systems
✓ Preserve NAV-based pricing discipline
Access Secondary Market Liquidity
✓ Trade at fair prices tied to published NAV
✓ Maintain regulatory compliance automatically
✓ Settle trades on-chain with full transparency
✓ Benefit from competitive market maker quotes
Earn Spreads on Fund Token Flow
✓ Access institutional fund token flow
✓ Operate within defined pricing bounds
✓ Integrate via standardized RFQ protocol
✓ Manage risk with compliance pre-checks
Protocol Architecture
Diamond Pattern (EIP-2535)
UFX uses the Diamond Standard which allows:
• Upgradeable: Individual modules can be updated without redeploying everything
• Unlimited: No contract size limits
• Efficient: Shared state across all modules
Core Modules
GovernanceModule
System administration and emergency controls (pause/unpause)
FundRegistryModule
Catalog of all tradeable funds and their parameters
IdentityModule
Investor identity and KYC credential management
ComplianceModule
Rule enforcement and transfer eligibility checks
NavOracleModule
NAV price feed management and validation
PricingModule
Price validation against NAV bounds
FeeModule
Fee collection and distribution to protocol and issuers
TransferAgentModule
Registry update queue for off-chain reconciliation
RFQEngineModule
RFQ lifecycle management (create, quote, accept)
SettlementModule
Escrow and atomic swap execution
UfxViewModule
Read-only data aggregation for dashboards
High-Level Trading Workflow
Compliance Framework
Identity Verification
Every participant has on-chain identity with KYC level, residency, and credential expiry.
Transfer Eligibility
Both parties must have valid KYC, meet minimum level, allowed residency, and within exposure limits.
Pricing Discipline
Every quote price must be within NAV ± configured bounds. Prevents pump-and-dump speculation.
Fee Structure
Dual-Fee Model
Default rate configured by admin, applied to all trades, collected in payment token
Per-fund fee cap set by admin, fee rate in quote by market maker, withdrawn by issuer
Common Questions
What happens if NAV becomes stale?
If NAV exceeds the max age threshold, new RFQs and quotes will be rejected until fresh NAV is published.
Can an investor create multiple RFQs simultaneously?
Yes, there's no limit on concurrent RFQs per investor, as long as they have sufficient token balances.
How are fractional shares handled?
Fund tokens use 18 decimals (like ETH), so fractional shares are supported down to 1e-18.
How long does settlement take?
Settlement is atomic and completes in a single transaction, typically within one block (12 seconds on Ethereum).
Can trades be reversed?
No, once settled, trades are final and irreversible. Only pending escrows can be cancelled.