# AIR economics / Underwriting

**URL:** <https://gov.centrifuge.io/t/air-economics-underwriting/3383>\
**Category:** Governance discussion\
**Created:** [January 7, 2022, 4:49pm UTC](https://gov.centrifuge.io/t/air-economics-underwriting/3383 "2022-01-07T16:49:41Z")\
**Posts on this page:** 6\
**Page:** 1

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**Author:** ![Fab](https://avatars.discourse-cdn.com/v4/letter/f/51bf81/32.png) [@Fab](https://gov.centrifuge.io/u/Fab)\
**Post date:** [January 7, 2022, 4:49pm UTC](https://gov.centrifuge.io/t/air-economics-underwriting/3383/1 "2022-01-07T16:49:41Z")

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AIR & underwriting idea

**Onboarding Ambassadors**  
onboard new members and collect data on the ground of which an underwriting algorithm calculates a credit score and the amount of AIR that needs to be staked.

**Underwriter auction**  
Underwriter auction Underwriters analyze the members data + credit score and price the credit line’s risk in form of transaction fees the new member will have to pay (high fees for risky members, low fees for trusted members). The underwriter that has offered the lowest transaction fee gets to underwrite the credit line, and thus collect a share of the member’s future transaction fees

**Skin in the game” staking**  
To activate the member’s account, the winning underwriter will now have to stake AIR in accordance with the size of the credit line and its risk. (Around 20% of the credit line’s size)

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**Author:** ![Fab](https://avatars.discourse-cdn.com/v4/letter/f/51bf81/32.png) [@Fab](https://gov.centrifuge.io/u/Fab)\
**Post date:** [January 7, 2022, 4:50pm UTC](https://gov.centrifuge.io/t/air-economics-underwriting/3383/2 "2022-01-07T16:50:32Z")

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Please, iterations and criticism more than welcome.  
If people think it is worth pursuing I can expand further.

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**Author:** ![Tjure07](https://dub1.discourse-cdn.com/flex013/user_avatar/gov.centrifuge.io/tjure07/32/1039_2.png) [@Tjure07](https://gov.centrifuge.io/u/Tjure07)\
**Post date:** [January 8, 2022, 9:29am UTC](https://gov.centrifuge.io/t/air-economics-underwriting/3383/3 "2022-01-08T09:29:30Z")

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Salut Fabien.

@Ash already commented in Discord. Maybe you can continue the discussion here

 ![image](https://europe1.discourse-cdn.com/flex013/uploads/centrifuge1/original/2X/f/f9f1436eb6165128501d616f7e32f462f07d3992.png)

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**Author:** ![Fab](https://avatars.discourse-cdn.com/v4/letter/f/51bf81/32.png) [@Fab](https://gov.centrifuge.io/u/Fab)\
**Post date:** [January 13, 2022, 5:34pm UTC](https://gov.centrifuge.io/t/air-economics-underwriting/3383/4 "2022-01-13T17:34:41Z")

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**Underwriting Process**

**Assumption** : the AO has to provide the TIN – junior tranche at the LLC level (secured promissory note).

**NB** :This memo has been prepared using knowledge and material Davoa acquired over time by being involved with various portfolio companies.

**Protocol roles – Agents**

_Borrower - A.O._

Access credit lines

_Ambassador_

Onboard borrowers

Support

Deal brokerage

_Underwriter_

Assess risk

Price risk (set tx fees)

Front staking collateral

Repackaging risk

Share risk with delegating stakers

_Delegating Stakers_

Assume packaged risk

Provide liquidity to underwriters

**Process**

**Onboarding**

Ambassadors onboard new AO and collect data on the ground of which an underwriting algo calculates a “credit score” and the amount of AIR that needs to be staked.

**Broadcast to underwriters**

The credit soccer and essential data (social media - underlying assets) regarding the AO are then broadcasted to a distributed network of underwriters.

**Underwriter auction**

Underwriters analyze the AO data, credit score and price the credit line risk in form of transaction the new AO will have to pay (high fees for risky AO, low for trusted…)

The underwriter that has the lowest transaction fee gets to underwrite the credit line,and thus collect a share of the AO future transaction fees.

**Alignment of interest**

To activate the AO’s pool – asset back loan, the winning underwriter will now have to stake AIR in accordance with the size of the credit line and its risk. (around 20% of the value of the pool – loan size).

**Debt repackaging**

The underwriter can then package the new AO’s line of credit with other AOs to create a diversify portfolio.

Which allows the underwriter to offer delegating stakers as a staking pool.

**Delegated staking and refinance**

Once the delegating stakers deposited AIR the underwriter can extract a portion of the staked AIR, refinance and underwrite additional AO/_emphasized text_

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<div class="post-metadata">

**Author:** ![Fab](https://avatars.discourse-cdn.com/v4/letter/f/51bf81/32.png) [@Fab](https://gov.centrifuge.io/u/Fab)\
**Post date:** [January 13, 2022, 5:50pm UTC](https://gov.centrifuge.io/t/air-economics-underwriting/3383/5 "2022-01-13T17:50:58Z")

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AIR utility:

Governance, utility, and payment token  
Collateralization/warranty deposits, staking, fee payments, staking rewards

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<div class="post-metadata">

**Author:** ![Fab](https://avatars.discourse-cdn.com/v4/letter/f/51bf81/32.png) [@Fab](https://gov.centrifuge.io/u/Fab)\
**Post date:** [January 14, 2022, 3:34am UTC](https://gov.centrifuge.io/t/air-economics-underwriting/3383/6 "2022-01-14T03:34:18Z")

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Only in private if I am not mistaken