Clearing

Clearing is technically netting with a temporal component. In banking we see it as bilateral reduction of balance sheet leverage done at certain intervals. It is a necessary element in any Credit system. Centralized clearing divides agents in the network in two classes: those that can issue/clear money, and those that cannot. In the economic space protocol, clearing is a network process where every Agent participates and collectively assumes the role commonly taken by a specialized third party like a clearing house. Every Economic space agent also becomes clearer i.e. like a little banker who is part of a credit issuing and clearing network which is run just by participating in a joint Protocol. Economic space agents learn to do clearing through the creation of liquidity tokens: when you issue a Liquidity token, you issue it to the credit network. Every liquidity token becomes thus part of the credit network. That is how it is possible for them to clear. Liquidity tokens are used to facilitate and confirm ledger entries, generating stability in economic flows; they are not coins to accumulate or loaned for profit.