# Plyra Protocol: Compliance Posture **Version:** 2026-06-10 **Status:** Avalanche Fuji testnet (mainnet on roadmap) **Audience:** Institutional partners and their counsel Plyra Protocol is onchain credit infrastructure: structured credit vaults, credit default swaps, cross-chain-ready margin, and auto-compounding yield: deployed as non-custodial smart contracts on Avalanche. This document summarizes Plyra's compliance posture for institutional counsel evaluating pilot integrations. This is informational and not legal advice. Institutions should consult their own counsel. --- ## Design Posture Plyra is designed as **non-custodial, non-advisory infrastructure**. The protocol: - Does **not** take custody of user funds. - Does **not** provide investment advice, recommendations, or suggestions. - Does **not** route orders, execute discretionary transactions, or operate market-making on users' behalf. - Applies **fixed, protocol-set fees** uniformly, with changes subject to governance and timelocks. - Does **not** exercise off-chain operator discretion over protocol activity. This posture is intentional and reflected in the architecture of every layer. --- ## Mapping to SEC DeFi Front-End Conditions | Condition | Plyra design | |---|---| | **No custody of user funds** | All vaults (Forge, Yield, Nexus) and CDS contracts are non-custodial. Users transact directly with smart contracts from self-custodial wallets. Plyra never holds user assets off-chain. | | **No investment advice or recommendations** | The AI layer (AIAnalyst, AIStrategyOptimizer, AICreditEventDetector) publishes onchain signals as informational outputs. The protocol does not recommend trades, allocations, or positions. Users make their own decisions. | | **No order routing or execution** | Composability contracts (HedgeRouter, PoolRouter, FlashRebalancer, StrategyRouter) compose user-signed transactions into atomic onchain calls. They do not operate order books, route to external venues, or exercise discretion over execution. | | **Fixed, neutral fee structure** | Protocol fees are set in contract code, applied uniformly across users and positions, and accrue to the ProtocolTreasury contract. Fees are not variable by user, counterparty, or transaction. Changes require governance. | | **No discretion over transactions or market activity** | AIKeeper executes maintenance tasks (rebalancing, liquidations) via permissionless keeper calls triggered by deterministic onchain thresholds. There is no off-chain operator discretion. | --- ## Architecture Summary ### Custody Every contract that interacts with user assets is a **non-custodial smart contract**. Users approve and transfer from self-custodial wallets directly into the protocol. The protocol never operates a hosted wallet, pooled custody account, or off-chain asset store. Relevant contracts: - `ForgeVault`: issues tranche tokens (ERC-20) in exchange for USDC deposits; redemptions return pro-rata assets to the user. - `CDSContract` / `CDSPool`: bilateral or pooled credit default swap contracts; premium and payout flows are deterministic. - `YieldVault`: ERC-4626-inspired auto-compounding vault; user shares are redeemable for underlying assets. - `NexusVault`: margin accounts; users control deposits, withdrawals, and position opens directly. - `ProtocolTreasury`: receives protocol fees only; no user custody function. ### AI Layer: Non-Advisory The AI layer is informational, not advisory: - `AIAnalyst` publishes risk scores for reference assets onchain. Users and integrators may read them. They are not trade recommendations. - `AIStrategyOptimizer` simulates allocation scenarios and returns scored outputs. It does not execute trades on users' behalf and does not recommend which option to choose. - `AICreditEventDetector` monitors onchain signals for credit deterioration and publishes readings. - `AIKeeper` executes deterministic maintenance tasks via permissionless keeper calls triggered by onchain thresholds (e.g., health-factor breaches). The Plyra assistant embedded in the front end is scoped to product education only. Its system prompt explicitly prohibits investment advice, trade recommendations, and suggestions about what to buy, sell, or allocate. ### Fees Protocol fees are set in contract code and accrue to `ProtocolTreasury`. They apply uniformly; there is no per-user, per-counterparty, or per-transaction variation. Fee changes require governance action subject to timelock. ### Transaction Flow All user-initiated operations follow the pattern: **user signs transaction → smart contract executes atomically on-chain**. Composability routers wrap multiple contract calls into a single user-signed transaction; they do not execute on the user's behalf or route to external venues. ### Controls and Guardrails - **Timelocks** on all governance-controlled parameters - **Governance veto** over AI-published signals and strategy parameters - **Circuit breakers** on protocol-level emergency pause - **Open-source contracts** with public test coverage (756 tests: unit, integration, fuzz at 10k runs, invariant) - **Public contract addresses** published in the docs and SDK --- ## Disclosures in Product Surfaces The following disclosures are present in user-facing surfaces: - **Pilot intake form**: discloses the non-custodial and non-advisory posture. - **Docs > Compliance section**: summarizes design posture and maps to SEC conditions. - **Plyra assistant system prompt:** explicitly refuses investment advice. - **AI dashboard**: labeled as non-advisory onchain signals. --- ## Open Items for Institutional Counsel Institutions evaluating a pilot should review, with their own counsel: 1. Jurisdictional considerations specific to their entity. 2. Any bespoke fund-document or LPA restrictions on DeFi exposure. 3. The specific tranche or product they intend to use, and any reporting requirements that attach to it. 4. Cross-chain exposure implications if using Nexus for cross-chain margin. Plyra is currently testnet-only. Mainnet launch, audit completion, and formal legal memoranda are on the roadmap and will be published as they become available. --- ## Contact Institutional pilot requests: [app.plyra.io/pilot](https://app.plyra.io/pilot) Core team contact for counsel questions: available on request through the pilot intake.