Protocol Overview

Grunt is 3F’s solution for bringing leverage to Real World Assets (RWAs) and asynchronous assets in general. Under the hood, it is an on-chain bridge facilitation protocol: it enables leveraged yield strategies on protocols that settle asynchronously — such as RWA funds, tokenized treasuries, and other off-chain-settled instruments — by coordinating bridge loans, compliance, and position management entirely through smart contracts.

Note

“Grunt” is the internal name of the protocol and its Solidity codebase. Publicly, 3F distributes it as its leverage product — throughout these docs, Grunt refers to 3F’s solution for leveraging RWAs and asynchronous assets.

The Problem

Leverage in DeFi is straightforward when everything settles instantly. A user deposits collateral into a lending protocol, borrows against it, redeposits, and repeats — all within a single atomic transaction. This “looping” pattern is the backbone of leveraged yield farming on-chain.

But the highest-quality yield sources increasingly live outside the atomic settlement model. Real World Assets — tokenized treasuries, money market funds, private credit — settle over days or weeks. There is a fundamental timing mismatch: you cannot loop what you cannot settle atomically.

This means that on-chain leverage has been confined to assets that settle in the same transaction. An entire class of yield opportunities — often the most stable and institutional-grade — remains out of reach for leveraged strategies.

Bridge Loans: Solving the Timing Gap

In traditional finance, bridge facilitators solve this exact problem. They extend short-term financing to hedge funds, allowing them to take positions before settlement completes. The bridge facilitator fronts the capital; the fund repays once the underlying transaction settles.

Grunt brings this model on-chain through bridge loans. A bridge loan in Grunt is not an unsecured personal loan. It is a narrowly scoped, protocol-controlled advance of capital whose usage, constraints, and repayment are fully specified and enforced by smart contracts. The borrower is not a person — it is a protocol-managed position with deterministic behavior.

Here is how it works at a high level:

1. A user wants leveraged exposure to an async asset (for example, a tokenized treasury fund)
2. A bridge facilitator provides a bridge loan — short-term capital to cover the settlement gap
3. The protocol uses the bridge loan to subscribe to the fund on behalf of the user
4. Once the fund settles (days or weeks later), the resulting receipt tokens become collateral
5. The protocol borrows against that collateral on a lending market and repays the bridge facilitator
6. The user now holds a leveraged position backed by real collateral

Note

The bridge loan is a temporary advance that exists only during the settlement window. Once the underlying asset settles and becomes collateral, the bridge loan is repaid from protocol-level borrowing. At no point does an individual user hold unsecured debt.

On-Chain Bridge Facilitation

Grunt replaces the trust relationship with a bridge facilitator with smart contract enforcement. Every participant in the system — users, bridge facilitators, fund operators, lending protocols — interacts through contracts with explicit rules and constraints.

For bridge facilitators, the protocol guarantees that bridge loan capital is used exclusively for its stated purpose, with deterministic repayment logic and transparent collateral management. The risk is bounded and visible on-chain.

For users, the protocol guarantees transparent execution. There is no opaque intermediary making discretionary decisions. Leverage parameters, fee structures, and liquidation rules are all defined in contract configuration.

For on-chain funds and RWA issuers, the protocol respects compliance requirements. Deposits flow through permissioned wrappers that enforce KYB/KYC checks, and receipt tokens are wrapped to ensure they are only used as collateral within approved venues.

For lending protocols, the integration is clean. Borrow positions are configured with explicit collateralization ratios and liquidation thresholds that the Position Manager enforces independently of the underlying market parameters.

The Core System

At the center of Grunt are two main components:

• The Facility is the orchestration hub. It manages “intents” — on-chain work orders that define what should happen with deposited capital. The Facility coordinates the flow of funds between users, bridge facilitators, on-chain funds, and position managers. A single Facility can manage many concurrent strategies and leverage configurations.

• The Position Manager is the leverage container. It represents a user’s leveraged exposure as a single ERC20 share token. Under the hood, it aggregates one or more borrow positions across lending venues, tracks net equity (collateral value minus debt), and handles deposits, withdrawals, and pro-rata exits.

Supporting these are:

• Fund wrappers that standardize interaction with async settlement protocols behind a predictable state machine
• Request contracts that handle bridge facilitator settlement through a dual-token (PT/YT) model
• Transfer Guards that enforce compliance rules (blocklist and whitelist) across all token transfers

Users never interact with leverage mechanics directly. They hold shares in a Position Manager, and all leverage operations — subscribing to funds, managing collateral, borrowing, repaying — are mediated through the Facility.