Settlement Engine

The settlement engine enables instant crypto execution while ACH/wire transfers settle. An operator-funded prefunding pool advances capital so trades execute immediately, with KYC-tiered limits and margin monitoring to manage risk.

Instant Buy Flow

User: "Buy 1 BTC"  ->  Pool reserves $50k  ->  Executes at market  ->  ACH initiated
                                                                        |
                                              ACH clears (2-5 days) ----+
                                              -> Pool credit released   |
                                                                        |
                                              ACH fails ----------------+
                                              -> Auto-liquidate position
                                              -> Recover pool capital

Validate -- Check the account's KYC tier and outstanding credit against tier limits.
Reserve -- The pool locks funds equal to the order value. Four risk controls are enforced: per-transaction limit, per-user outstanding limit, pool utilization cap, and available capital check.
Execute -- The broker places the trade via the best provider (caller handles execution).
Initiate ACH -- The funding service starts the ACH transfer in parallel.
Track -- Settlement lifecycle events update the reservation status until the ACH clears or fails.

KYC-Tiered Limits

The maximum total outstanding prefunded credit per account depends on KYC verification level:

Tier	Instant Limit	Use Case
`basic`	$250	Email-verified users
`standard`	$5,000	ID-verified users
`enhanced`	$25,000	Full KYC + accredited
`institutional`	$250,000	Institutional accounts

If a new order would push an account's outstanding credit above its tier limit, the request is rejected.

Prefunding Pool

The pool is funded by the ATS operator and acts as a short-term credit facility. Pool configuration:

Parameter	Description
`max_pool_size`	Maximum total capital the pool can hold
`max_per_user`	Maximum outstanding credit for a single account
`max_per_transaction`	Maximum single reservation amount
`utilization_warning_pct`	Warning threshold (e.g. 0.80 = warn at 80% utilization)

The pool tracks utilization in real time. When a reservation settles (ACH clears), the credited amount is released back to available capital.

Reservation Lifecycle

pending_settlement -> settled        (ACH cleared, happy path)
pending_settlement -> failed         (ACH bounced)
pending_settlement -> margin_called  (price crash)
failed             -> liquidated     (force-sell to recover capital)
margin_called      -> liquidated     (force-sell after grace period)
margin_called      -> settled        (user deposits funds in time)

Margin Monitoring

While ACH is pending, the pool is exposed to price risk on the purchased asset. The margin policy defines three escalation levels based on drawdown from entry price:

Level	Default Threshold	Action
Warning	20% drawdown	Notify user, log alert
Margin Call	30% drawdown	Demand additional funds, freeze further instant buys
Auto-Liquidation	50% drawdown	Force-sell position to recover pool capital

A 24-hour grace period is given between margin call and forced liquidation, allowing the user to deposit additional funds.

Drawdown is calculated as:

drawdown = (entry_price - current_price) / entry_price

The CheckMarginHealth function scans all pending reservations against current market prices and returns alerts for any positions that have breached a threshold.

Pool Status

The pool exposes real-time utilization metrics:

{
  "total": 1000000.00,
  "available": 750000.00,
  "reserved": 250000.00,
  "utilization_pct": 25.0,
  "active_reservations": 12
}

Operators can add or withdraw unreserved capital at any time.