During onboarding, the protocol underwrites both the originator and their target borrowers using AI, drawing on insights from our experience working with fintech lenders in some of the world’s toughest markets. This approach is particularly valuable for originators in regions where credit bureaus and reliable data are scarce—challenges similar to those faced daily by Web3 lenders and by Web2 lenders in emerging markets with unbanked populations. AI plays a central role, gathering data, making real-time recommendations, and continuously underwriting based on borrower characteristics and the feasibility of the real-world asset (RWA) being exchanged for credit.
During onboarding, the protocol thoroughly assesses borrower characteristics, analyzing repayment patterns for similar profiles and relevant macroeconomic factors. It also evaluates the feasibility of the RWA to ensure sufficient margin to offset risk and deliver an attractive return to capital pools. Based on this assessment, the AI either generates an exchange ratio or suggests adjustments to the originator's credit product, such as implementing proven risk strategies like "low and grow," which starts borrowers with smaller loans that increase as they demonstrate reliable repayment.
Once the originator agrees to the exchange ratio, the AI configures smart contracts to manage all aspects of the lending process, including receivable purchase approvals and disbursements.
To reduce risk, capital pools require borrower payment processor disbursements to be routed through a network-provided wallet or bank account. Borrowers not accepting credit cards must use Sivo DeFi’s free QR code payments. Proceeds from consumer purchases, incentivized by the originator, are directly applied to the borrower’s loan balance, with any remaining funds transferred to the borrower’s wallet or account.