Sivo DeFi operates as a decentralized protocol with an economic structure designed to benefit all parties involved.
Originators: Loans meeting the credit box criteria are immediately purchased at a discounted face value of the exchanged future sales, providing originators with instant disbursement. This allows them to secure a high effective APR and invest in marketing and incentives. Upon full repayment, originators earn a success fee funded by cash collateral, further motivating them to ensure a successful loan outcome.
Borrowers: Borrowers gain access to low-cost or even interest-free credit, which is automatically repaid through originator-driven consumer purchases, attracting new and repeat customers.
Capital Pools: Capital sources enjoy market-leading returns, secured by upfront fees, cash for interest payments, tokenized collateral, and network reserves.
Sivo DeFi: The network earns fees for providing collateral, servicing, and facilitating the entire process.
Assumptions
Future Sales Exchanged: $10,000
Exchange Ratio: 2X
Loan Originated: $5,000
Projected Average Repayment Duration: 180 days
Capital Source Arrangement Fee: 1%
Collateral Costs: 3%
Network Capital Costs = 25% APR
Base rate of 20% APR
Slope rate of 6.25% APR
80% Utilization
Projected Portfolio Loss: 20%
Servicing Costs: Variable
Hedging Costs: N/A
Network-Mandated Marketing Budget: 10% of Loan
Network-Mandated Incentive Budget: 10% of Loan
Average Consumer Purchase Size: $30
Number of Purchases Per Day: 2
Outcome
Capital Pool Disbursement: $10,100
Principal Loaned to Borrower: $5,000
Cash Collateral (Locked): $2,000
Interest Payment (Locked): $1,325.22 (25% APY)
Arrangement Fee: $100
Network Fee (3%): $300
Originator receives: $1,374.78 (Day 1)
Marketing Costs (10% of Loan): $500
Incentive Costs (10% of Loan): $500
Origination and Servicing Costs: $150
Net Amount Retained by Originator After Costs: $224.78
Loan is Repaid: (2 x $30 consumer purchases daily - Day 168)
Success Fee to Originator: $2,000 (funded by collateral)
Effective APR:
Originator: 217.86% (based on $5,000 loan originated)
Capital Pool: 51.90% (based on $10,100 loan originated)
IRR:
Originator: 350.84% (based on $5,000 loan originated)
Capital Sources: 64.07% (based on $10,100 loan originated)
SVO:
Determined based on the amount of interest generated or paid within the capital pools
The model demonstrates that all parties involved benefit significantly, without burdening the borrower with excessive costs. This approach ensures sustainability while maintaining borrower-friendly terms.