> For the complete documentation index, see [llms.txt](https://docs.on.nexus/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.on.nexus/protocol-architecture/system-overview.md).

# System Overview

#### Defining "Sovereign Yield"

Nexus Protocol is strictly engineered around a singular philosophical and technical axiom: Sovereign Yield on Bitcoin.

In the context of the Nexus architecture, *Sovereign Yield* is defined by the mathematical and cryptographic separation of asset custody from trade execution. It means generating continuous market-making revenue (arbitrage spreads and protocol fees) where the execution keys are *solely* generated, held, and signed by the sovereign entity's local hardware.

Unlike custodial yield (where keys are surrendered to centralized institutions) or synthetic yield (where assets are bridged/wrapped into different blockchain execution environments), Sovereign Yield derives value purely from native Bitcoin L1 UTXO state transitions via PSBTs.

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#### Architectural Layout

The OnNexus architecture implements a modular, interoperable framework where three specialized components handle distinct aspects of the trading and liquidity provision workflow. This separation of concerns enables independent scaling, optimization, and upgrade paths while maintaining system-wide consistency and reliability.

#### System Overview

The protocol's architecture reflects the core design principle of separating coordination from execution, enabling sophisticated optimization while preserving Bitcoin's trustless properties through three primary technical components.

Core Technical Components

| Component            | Operator             | Primary Function                                                                   |
| -------------------- | -------------------- | ---------------------------------------------------------------------------------- |
| Nexus Composer       | OnNexus              | Intent routing engine calculating optimal execution paths and assembling PSBTs     |
| Independent Node     | Institutional Makers | Self-hosted, sovereign liquidity provision and autonomous trading capabilities     |
| OnNexus Managed Node | OnNexus              | Managed liquidity platform providing streamlined institutional execution workflows |

High-Level System Diagram

![Architecture](/files/fOsfBMMuszP8lnka9ze9)