Within the Sivo DeFi network, Real-World Assets (RWAs) represent future sales exchanged for credit, where the borrower's cost of generating revenue is significantly lower than the revenue exchanged. This margin effectively mitigates risk, eliminating the need for collateral or high-interest rates, and instead, providing low-cost or even interest-free credit.
Unlike traditional debt funds, which involve labor-intensive processes and complex terms, Sivo DeFi offers originators a straightforward proposal centered on a ratio for exchanging future sales for credit. This model enables originators to manage costs, meet or exceed their target returns, and deliver market-leading returns for capital pools.
After loan origination, receivables are immediately purchased at a discounted face value of the exchanged future sales, and originators receive a disbursement, including funds to cover expenses and drive consumer traffic. As purchases are made, the borrower’s loan is automatically repaid. Upon full repayment, originators earn a success fee from locked cash collateral, aligning all parties for a successful outcome.
The exchange ratio formula can be viewed in the Sivo DeFi White Paper found here: (Insert Link)