POP: Defactor

Real World Assets Pool Onboarding Proposals (POP)
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Overview:

  • Business Name: Defactor

  • Current AUM: Currently Defactor does not have any assets under management as we are using Consolfreight’s structure to test our business model. We have created our financial structure including an SPV in Delaware that will allow us to securely manage and meet compliance requirements for the assets placed through our platform. The idea is to move some of the assets from the current Consolfreight pool, CF4, into the new Defactor pool.

  • $ Volume of Transactions Completed Last 12 months: $16.92M Since Dec 2021. All these transactions have been placed by Consolfreight using our Defactor platform. The idea behind this was to help Consolfreight scale and expedite growth through technology.

  • Target Launch Date: ASAP

  • Location and Team Size: Defactor is based in Switzerland, with an operational company running from Dublin, Ireland (Lanzo Ops) and with our SPV located in Delaware, US. This follows the structure already tested by Consolfreight and Centrifuge. The total team is 17 people between Tech, Operations, Marketing and Commercial.

  • Years in Operation, if less than 2 years in operation, number of years founding team has worked together: Defactor originated in 2021 with an experienced founding team from across the financial services, technology, and global supply chain industries. Although the team had been working together for 3+ years on other projects, they formally established Defactor from the experience in supporting the mission of Consolfrieght, one of the first businesses leveraging liquidity on Centrifuge. The team experienced first-hand how Defi could address liquidity problems in a traditional finance system.

  • Historical Loan Tape (years): 300+ assets, 30M+. The Defactor co-founding team includes two executives from Consolfreight, together with more than 30 years experience working in global trade finance and supply chain ecosystems. To-date they have 300+ assets and over $30M+. As one of the asset originators scheduled to be part of the Defactor pool, Consolfreight is on track to place more than $80M in 2022.

  • Key Professional Partners (legal, accounting, operational, technical, structuring):

    • Legal (Wagner and Vieli, McCann Fitzgerald, Manatt, Phelps & Phillips, LLP)
    • Accounting (Centralis)
    • Operational (Lanzo Ops)
    • Technical (Internal resources + Atom +Xportal)
    • Structuring (Genesis Block)
    • Issuer Governance (Citadel SPV LLC)

  • Strategy:

  • Describe your business and go to market strategy.

    • What makes your approach unique within your industry?

Our approach is to support the wider business community prosperity by providing alternative liquidity funding to Asset Originators to support businesses to execute good quality trade transactions that are excluded from the TradFi banking due to overly restrictive criteria. Our immediate focus will be to provide liquidity for trade related asset classes including Receivables Financing, Trade Finance and Inventory Financing. Having direct experience of going through this process previously allows us to guide companies on their journey and introduce them to DeFi liquidity to meet their needs. As mentioned above, Defactor is bringing 2.5 years experience in the defi space applied to RWAs. This comes as part of the journey alongside Centrifuge when building Consolfreight’s business model. Consolfreight was the first AOs to hold a revolving pool in Tinlake and it is the longest pool holder in Tinlake. It has also been a strong partner for Centrifuge in this journey and helpful on the test and development of some of the current solutions provided by Tinlake.

  • Why are you a good partner for Centrifuge?

Defactor will accelerate the onboarding of A/O onto the Centrifuge platform providing key derisking, monitoring and covenant management. Our mission is to broaden the use cases for DeFi with focus on growth industries, SMEs, and specific global markets.

Furthermore, we share the same vision of making Defi accessible and democratisation of investment use of funds.

  • How do you differentiate yourself from competitors?

We differentiate ourselves through our focus on RWA, building a team of industry experts, delivering simplified user experience, and web3 first-approach for building solutions.

We are focused on real-world asset tokenization and therefore, aligning strongly with Centrifuge. Defactor is an early entrant into a segment of the DeFi market which has far-reaching implications and huge growth potential. Instead of representing abstract digital value, tokens represent tangible goods and services.

We will leverage Web3 technologies and build a bridge from TradFi to deliver faster and lower barriers to entry for borrowers and investors. Furthermore, Defactor’s specialist knowledge in supply chain finance means it can consider deals that a bank might deem as presenting too much risk, but that in reality they are not. The key is to provoke innovation across AOs on how risk is assessed and mitigated.

Lastly, our model is SME friendly. We recognize banks are disincentivized to handle SMEs which do not satisfy their risk assessment criteria in terms of cash flow and credit history, preferring safe bets on large, established businesses. Defactor leverages its specialist knowledge of supply chain finance to provide accurate risk assessments of businesses of this scale.

  • How is your entity financed today, what are the current sources of capital:

    • Equity raised:$14M
    • Debt raised:$5M including CF4

  • What is your entity’s revenue/fee model:

    • Origination fees: Annual membership fee
    • Target fee spread: up to 2.0% APY being a volume based fee calculated on the volume of funding provided linked to number of days funding so its directly related to the business needs.
    • Other: Ancillary services will be provided at a later stage

  • Capital

    • Please explain the source(s) of, and ability to scale, your first-loss junior (TIN) capital in the pool: We will operate a number of pools per each asset class, each with a distinctive risk profile and each with a segregated first loss Junior Tranche. All AO’s coming into their respective pool need to participate in the Junior tranche at the required level. In addition, Defactor will invest capital in the short term to support this process. At a later stage, we will welcome external investors to participate in the junior tranche.
    • Please explain the source(s) of, and ability to scale, your senior (DROP) capital in the pool: We will pursue external investors to scale. We have scaled up our Team in recent months with LP research and targeting being currently completed to enable pitching from Q3.
    • Capital relationships and how much you will bring through Centrifuge KYC to invest in either senior or junior tranche of your pool: We expect the total pool to be at $50M within 12-months with all coming through the Centrifuge ecosystem.

  • DeFi

    • Outline why DeFi is important to your business strategy: We believe it will unleash a new wave of financial solutions to the TradFi system. Defactor is tapping into the emergent market of real-world asset tokenization and is particularly suited to addressing gaps in accessibility to liquidity for Small and Medium-sized Enterprises (SMEs), which account for over 95% of global businesses and over 60% of global employment. As well as financial, there is a clear social benefit in supporting these SMEs due to the fact they are often neglected or underfunded by Traditional Finance (TradFi) institutions. Tokenization can be used in the broadest possible sense to include digital assets, physical assets, or documents representing value.The global trade finance market was valued at $7.6T (USD) in 2019 and is projected to reach over $10.9T (USD) by 2030. This presents broad opportunities for providing liquidity to tech-savvy new businesses in the space. With our expertise, our unique approach to the market and Centrifuge’s innovation, we are confident, together we will have success.

  • Articulate why Centrifuge’s community and protocol is a fit for financing: As the first and leader in the RWA space, we are keen to work with teams and technology that align with our mission. It is a parachain of Polkadot and connects to Ethereum via a bridge. Investors receive returns in yield as well as rewards in the native token, $CFG. Additionally, Centrifuge has a strong community of builders that can be potential partners or collaborators for Defactor. We believe an active and collaborative community is critical for driving adoption, innovation, and stronger outcomes for Defi. Furthermore, we believe this partnership can evolve in a way that a strong correlation between $CFG tokens and Defactor token ($FACTR) will benefit both communities, and in the long run positively impact other bigger communities like Maker DAO.

Structure: Risk & Terms

  • Please explain the key risks inherent in this opportunity and asset class:

    • We provide collateralised cash flow funding based directly on the underlying transaction asset to provide full risk visibility supported by real time risk reporting
    • To minimize risk of non repayment we will complete a risk assessment at multiple levels being 1) Underlying Debtor assessment 2) A.O. assessment.
    • A.O. risk assessment is completed by both quantitative and qualitative criteria.
    • This means we risk rate both levels prior to funding so that the transaction risk profile is fully understood at all times in the funding cycle.
    • This information will be available in our platform risk dashboard with detailed documentation stored in a virtual data room.
    • This rating process will be dynamic and repeated on a quarterly basis for the benefit of both AO’s & LP’s.
    • Based on our risk profile assessment this will determine both the funding contract risk covenants and APY for AO’s plus allow LP’s to fund transactions that meet their risk appetite.
    • Collateral is captured by transferring AO debtor assignment rights plus any insurance coverage to the SPV structure giving scope to pursue multiple sources of repayment in case of non payment by any one source.

  • Pool Size & Pipeline:

    • At Launch: US$ 10MM
    • 6 Months after Launch: US$20MM
    • 12 Months after Launch: US$ 50MM
    • Origination Pipeline Details: We have 3 companies in the pipeline for origination purposes. Few of the deals these companies have in the pipeline are as follows:
      • -. $10MM Facility for 1 Year South Africa Mine
      • -. $8.5 MM Facility to aggregate (2 Months) Coal and Export against a L/C
      • -. $2 MM X Month Facility to Export Sugar from Guatemala to UK

  • Asset & Rates:

    • Asset Type(s): Supply Chain Finance (Receivables)
    • Average Ticket Size: $100K
    • Average Asset Maturity: Max 120 days
    • Expect Default Rate: <1%
    • Expected borrowing rate on senior tranche (on-chain): 3.5% - 5%

Expected lending rate to end borrower (off-chain): 9% -15%

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The Centrifuge community has reviewed the POP for Defactor , based on the 10 criteria , and the result is: :seven: / :ten:.

SCORE

For each criteria, either a :zero: (criteria not met) or :one: (criteria met) will be given.

Below you will find the results of the individual criteria:

Business Years in Operation: :one:
Off-Chain Institutional Investors: :one:
Strong Pipeline: :one:
Volume Originated last 2 years: :zero:
Historical Loan Tape: :zero:
TIN Tranche: :one:
DROP Tranche: :zero:
Pool Value at Launch: :one:
Pool Value in 1 Year: :one:
Asset Maturity: :one:

RESULT

:white_check_mark: This proposal meets the threshold of >66% and has passed step 2.

NEXT STEP

Step 3 will be to get a recommendation from the Centrifuge DAO. This will be done within the next 5 days and the result will be published here on the Forum.

If you want to see all the steps of Stage 1 of the POP process, you can check this post here .

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Maybe not the right place to pose such a question. Was curious on how the $CFG and $FACTR tokens are interlinked with each other? Sounds interesting and trying to understand.

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Recommendation from k/factory: Continue POP Process to Step 3: Pool Party Poll to Community

The Defactor POP is fascinating as its the original team behind the the Consol Freight Pool, one of the earliest Issuers on the Tinlake platform. It’s been encouraging to see the progress that Consol Freight has made in just under two years, and clearly the DeFi knowledge and know-how has grown, the business has grown, and the team continues to build momentum and expertise both in their asset class and the underlying technology needed to scale their industy

The biggest weakness of this POP is the DROP Tranche at Zero. This must be addressed should the community approve of a Pool Party from Defactor in their Pool Party presentation. With a global recession on, all of Defi still roiling from liquidations, and continued instability globally in nation states and rising interest rates, finding people’s attention and asking protocols to focus on RWAs is incredibly difficult. For Defactor, as they look to scale their business, and take on the technical difficult of being the first Pool on Centrifuge Chain, the ability to reasonably scale their business through off-chain senior investors (DROP) in their Pool is mission critical.

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They aren’t. These are seperate tokens, for seperate projects.

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I am aware of that.

Just would like further information on the below quote and how the tokens are potentially correlated:

“Furthermore, we believe this partnership can evolve in a way that a strong correlation between $CFG tokens and Defactor token ($FACTR) will benefit both communities, and in the long run positively impact other bigger communities like Maker DAO.”

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I’d like to see this POP go towards a Poll for a Pool Party.

There are technical implications, legacy assets / journey with Centrifuge/Tinlake, and I think this story will be quite interesting to the community to see how this group has evolved and arrived at this pivotal moment in their business’ journey.

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POP Review DCM: Defactor

Hi I’m Mike, the Founder of DeFi Capital Markets (“DCM”), an entity in the Centrifuge community that is focused on building the future of decentralized capital markets by onboarding institutional investors, assets and infrastructure to the DeFi ecosystem. Previously I was a core member of the Centrifuge team and we at DCM are currently contributing to the Centrifuge, RWA Market (Aave) and MakerDAO ecosystems. The current, and future, employees of DCM are largely from institutional investment and credit backgrounds and we intend to provide views on proposed pools coming through the POP process. Our views do not amount to financial advice and nothing contained in this post constitutes a solicitation, recommendation or endorsement of any investment. Community members should do their own independent research.

I will reuse my recent macro wrap: Macro conditions have broadly deteriorated across markets as inflation has reached a multi-decade high and has spurred a more aggressive Fed policy. The resultant rise in interest rates has driven a sharp sell-off of global financial assets, crypto being no exception. DeFi liquidity has contracted markedly in the last few months, and recently we have witnessed several large scale insolvencies that have shaken confidence in the sector. As deFi investors retreat and significant swathes of capital are erased from the ecosystem it makes for a notably difficult backdrop to raise new financing. That being said, real-world assets tied to productive cash flows outside the crypto ecosystem offer investors a new avenue to generate yield in a more sustainable fashion. Given the financial conditions, investor appetite for new endeavours is expected to remain limited for the time being, however we are optimistic this could improve once the dust settles and RWAs continue as an emerging trend.

The assets proposed have short-term maturity, which is a positive in the current DeFi market where long-duration assets have less demand. However, the proposed senior financing rates are well below the desired cost of funding that DCM has been informed of through numerous conversations. Although it may be a difficult lift we see DeFactor as a well aligned platform and hope the short-term nature of the assets offsets the low senior financing rates.

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Hi Centrifuge community,

It has been a while since we posted our POP. We want to give you an update. A lot has happened on our site but also for Centrifuge.

As some of you may know, we have been part of the Centrifuge ecosystem since 2019. Our origins are in ConsolFreight, one of the first Issuers to launch a pool on Tinlake. We support all previous versions of Tinlake and then subsequently started one of the first revolving pools on the current Tinlake protocol (CF4 as our 4th pool). We are firm believers in what Centrifuge is building and want to be part of this financial revolution. Now, with Defactor, we are looking forward to continuing this journey together!

Centrifuge is about to launch Investor Pools on the Centrifuge Chain. This is the next version of the Centrifuge Protocol and a major and very important step to moving credit, as it is currently provided by known financial institutions and structures, on the blockchain.This is dramatically improving the technology Centrifuge has built for Tinlake. The Centrifuge dev teams have finished the work, dry tested and audited this first version of Investor Pools on the Centrifuge Chain. It now needs to be proven to work in the real world with real assets, real borrowers, and real investors.

We are proposing to turn our POP into the proposal to open the first Investor Pool on the Centrifuge Chain. We think we are the perfect candidate to run the Proof of Concept (PoC) for Investor Pools. The focus of the below update is a POP, which is a perfect pilot:

  • A partner with the technical expertise and experience to run it
  • Real first time use of Investor Pools on the Centrifuge Chain
    • Real assets
    • Real investors
    • Real borrowers
  • Reduce the commercial and financial risks with
    • Limited scope (kind and number of assets and partners)
    • Limited size with a cap of $2M TVL
    • Limited maturity (we are planning to replace this pool with a full blown pool within 12 months)

We think this update is also helping the Centrifuge Credit Group to do a faster review and ask you the Centrifuge DAO for support.

Many thanks for considering and ongoing support!

Alejandro

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POP Update:

About Defactor:

Defactor is a DeFi ecosystem, purpose built for bridging traditional Supply Chain Finance suppliers and the world of Defi through tokenization of Real World Assets. Defactor provides the necessary technological and financial tools for companies to access blockchain financing, efficiently and securely whilst providing investors with secure, compliant access to DeFi investments, backed by tokenized RWAs.

Defactor brings Real-World Assets (RWA) into DeFi to facilitate our community’s wider economic growth and wellbeing by providing collateralised funding to borrowers on one side who are established FinTechs funding SME global trade flows and funded by investors on the other side.

Defactor bridges Real-World Assets into DeFi by leveraging our proprietary technology developed over the past 2 years that tokenizes RWA and brings these on chain by our new generation smart contracts.

POP Overview:

  • Business Name: Defactor Labs

  • Current AUM: The Defactor project launched in 2021 and established its initial financial structure with an SPV in Delaware allowing us to securely manage and meet compliance requirements for the assets placed with the platform. Now in 2023, Defactor Labs is managing almost $1.5M, and intends to launch a new pool on Centrifuge, offering Trade Finance assets from trusted Asset Originators (AOs) in the Defactor Labs ecosystem.

  • $ Volume of Transactions Completed Last 12 months: So far we have funded almost $2M in transactions from Defactor Labs clients including: Consolfreight, Teybridge, Fivana, Smaqotec, Token Traxx. In addition, Defactor has facilitated Consolfreight’s transactions with a value of $16.92M since Dec 2021. It is important to note that $681,330 are on-chain transactions.

  • Target Launch Date: April 2023

  • Location and Team Size: Defactor Association (DAO) was formed in Zug, Switzerland, in 2021 and the Defactor Labs operational company and largest contributor of the Defactor ecosystem, was established in Dublin, Ireland the same year. Defactor Labs operates two financial vehicles targeting different markets, LUX SV targeting the European market and Delaware SPV targeting the US market. The Delaware SPV follows the structure already tested by Consolfreight and Centrifuge with the current CF4 pool on Tinlake. The Defactor team is dispersed across EU, US and Asian time zones, with 17 people across Operations, Tech, Marketing and Commercial.

  • Years in Operation, if less than 2 years in operation, number of years the founding team has worked together: The Defactor project originated in 2021 with an experienced founding team from across the financial services, technology, and global supply chain industries. Although the team had been working together for 3+ years on other projects, they formally established Defactor from the experience in supporting the mission of Consolfrieght, one of the first businesses leveraging liquidity on Centrifuges Tinlake. The team experienced first-hand how DeFi could address liquidity problems in a traditional finance system and have gone on to launch with the Defactor project a Real World Assets origination ecosystem with global reach and capacity to solve the funding gap for SMEs and liquidity providers across the globe.

  • Historical Loan Tape (years): 400+ assets, 40M+. The Defactor co-founding team includes two executives from Consolfreight, together with more than 30 years experience working in global trade finance and supply chain ecosystems. To-date they have 400+ assets and over $40M+. As one of the asset originators scheduled to be part of the Defactor pool, Consolfreight is on track to place more than $60M in 2023. Also, we have added deep expertise from traditional finance like Maurice Tracey. He brings to DeFi a wealth of TradFi experience with a proven track record in driving sustainable profitable business growth built on deep knowledge of commercial strategy, business development and risk management. This is reflected in building a market leading finance business with annual sales (new contracts) increasing from c$20m to c$350m with TVL increasing by c300% pa over an eight year period.

  • Key Professional Partners (legal, accounting, operational, technical, structuring):

    • Legal (Wagner and Vieli, McCann Fitzgerald, Manatt, Phelps & Phillips, LLP, CMS.)
    • Accounting (Centralis)
    • Operational (Defactor Labs)
    • Technical (Internal resources + Atom +Xportal)
    • Structuring (Genesis Block)
    • Issuer Governance (Citadel SPV LLC)

  • Strategy, Describe your business and go to market strategy.

    • What makes your approach unique within your industry?

Our approach is to support the wider business community prosperity by providing alternative liquidity funding to Asset Originators to support businesses to execute good quality trade transactions that are excluded from the TradFi banking due to overly restrictive criteria. Our immediate focus will be to provide liquidity for trade related asset classes including Receivables in Trade Finance. Having direct experience of going through this process previously allows us to guide companies on their journey and introduce them to DeFi liquidity to meet their needs. As mentioned above, the Defactor project is bringing more than 50 years of TradFi experience across the team, 20 years of combined experience in the DeFi space applied to RWAs. This comes as part of the journey alongside Centrifuge when building Consolfreight’s business model. Consolfreight was the first AO to hold a revolving pool in Tinlake and it is the longest pool holder in Tinlake. It has also been a strong partner for Centrifuge in this journey and helpful on the test and development of some of the current solutions provided by Tinlake.

  • Why are you a good partner for Centrifuge?

Defactor Labs will accelerate the onboarding of AOs onto the Centrifuge platform providing key derisking, monitoring and covenant management. Our mission is to broaden the use cases for DeFi with focus on growth industries, SMEs, and specific global markets.

Furthermore, we share the same vision of making Defi accessible and democratisation of investment use of funds.

  • How do you differentiate yourself from competitors?

We differentiate ourselves through our focus on RWA, building a team of industry experts, delivering simplified user experience, and web3 first-approach for building solutions.

We are focused on real-world asset tokenization and therefore, aligning strongly with Centrifuge. Defactor is an early entrant into a segment of the DeFi market which has far-reaching implications and huge growth potential. Instead of representing abstract digital value, tokens represent tangible goods and services.

We leverage Web3 technologies and provide a bridge from TradFi to deliver faster and lower barriers to entry for borrowers and investors. In March 2023 Defactor Labs launched Alpha, the first-ever institutional-grade #DeFi securitisation structure in Europe. Pre-registration opened on 8/03/23. Alpha, is a legally compliant funding structure, which is backed by Black Manta Capital Partners, a BaFin licensed broker-dealer, and offers investors a secure and reliable entry point to the world of DeFi.

Furthermore, our Teams’ combined TradFi and DeFi specialist knowledge across supply chain, finance and liquidity vehicles places the Defactor pool in a unique position to assess and mitigate risk within an innovative AO context. Where a bank might deem a deal as presenting too much risk, given their preference to facilitate existing customers only, Defactor Labs is in a position to provide clarity where banks are not. The key is to provoke innovation across AOs on how risk is assessed and mitigated.

Lastly, our model is SME friendly. We recognize banks are disincentivized to handle SMEs which do not satisfy their risk assessment criteria in terms of cash flow and credit history, preferring safe bets on large, established businesses. Defactor leverages its specialist knowledge of supply chain finance to provide accurate risk assessments of businesses of this scale.

  • How is your entity financed today, what are the current sources of capital:

    • Equity raised:$14M
    • Debt raised:$2M

  • What is your entity’s revenue/fee model:

    • Origination Fees: Annual membership fee based on AO limit
    • Funding Fee: based on number of days individual asset funding is provided
    • Interest: is charged on the funding volume deployed with interest calculated on a daily accrual basis with minimum charging period of 21 days
    • Other: Ancillary services will be provided at a later stage

  • Capital

    • Please explain the source(s) of, and ability to scale, your first-loss junior (TIN) capital in the pool: In the short term, Defactor Labs will invest capital to cover all the junior trench.The idea is for all AO’s coming into the pool need to participate in the Junior tranche at the required level. At a later stage, we will welcome external investors to participate in the junior tranche.
    • Please explain the source(s) of, and ability to scale, your senior (DROP) capital in the pool: We will pursue external investors to scale. We have scaled up our Commercial Team in recent months with LP targeting and onboarding.
    • Capital relationships and how much you will bring through Centrifuge KYC to invest in either senior or junior tranche of your pool: We expect the total pool to be at $5M within 12-months with all coming through the Centrifuge ecosystem.

  • DeFi

    • Outline why DeFi is important to your business strategy: We believe it will unleash a new wave of financial solutions to the TradFi system. Defactor is tapping into the emergent market of real-world asset tokenization and is particularly suited to addressing gaps in accessibility to liquidity for Small and Medium-sized Enterprises (SMEs), which account for over 95% of global businesses and over 60% of global employment. As well as financial, there is a clear social benefit in supporting these SMEs due to the fact they are often neglected or underfunded by Traditional Finance (TradFi) institutions. Tokenization can be used in the broadest possible sense to include digital assets, physical assets, or documents representing value.The global trade finance market was valued at $7.6T (USD) in 2019 and is projected to reach over $10.9T (USD) by 2030. This presents broad opportunities for providing liquidity to tech-savvy new businesses in the space. With our expertise, our unique approach to the market and Centrifuge’s innovation, we are confident, together we will have success.
    • Articulate why Centrifuge’s community and protocol is a fit for financing: As the first and leader in the RWA space, we are keen to work with teams and technology that align with our mission. Investors receive returns in yield as well as rewards in the native token, $CFG. Additionally, Centrifuge has a strong community of builders that can be potential partners or collaborators for the evolving Defactor ecosystem. We believe an active and collaborative community is critical for driving adoption, innovation, and stronger outcomes for Defi. Furthermore, we believe this partnership can evolve in a way that a strong correlation between $CFG tokens and Defactor token ($FACTR) will benefit both communities, and in the long run positively impact other bigger communities like Maker DAO.

  • Structure: Risk & Terms

    • Please explain the key risks inherent in this opportunity and asset class:

    • We provide collateralised cash flow funding based directly on the underlying transaction asset to provide full risk visibility supported by real time risk reporting

    • To minimize risk of non repayment we will complete a risk assessment at multiple levels being 1) Underlying Debtor assessment 2) A.O. assessment.

    • A.O. risk assessment is completed by both quantitative and qualitative criteria leveraging Defactor Internal Risk Score scorecard to allocate transactions to predefined risk rating groups Prime+, Prime, Prime- & SubPrime

    • This means we risk rate both levels prior to funding so that the transaction risk profile is fully understood at all times in the funding cycle.

    • This information will be available in our platform risk dashboard with detailed documentation stored in a virtual data room.

    • This rating process will be dynamic and repeated on a regular basis for the benefit of both AO’s & LP’s.

    • Based on our risk profile assessment this will determine both the funding contract risk covenants and APY for AO’s plus allow LP’s to fund transactions that meet their risk appetite.

    • Collateral is captured by transferring the AO asset by assignment of rights plus any insurance coverage to Defactor SPV structure giving scope to pursue multiple sources of repayment in case of non payment by any one source.

  • Pool Size & Pipeline:

    • US$ 2MM

    • Origination Pipeline Details: We have 2 companies in the pipeline for origination purposes. Few of the deals these companies have in the pipeline are as follows:

      • $10MM Facility for 1 Year
      • $8.5 MM Facility to aggregate (2 Months) Export against a L/C
      • $2 MM X Month Facility to Export Sugar from Guatemala to UK

  • Asset & Rates:

    • Asset Type(s): Supply Chain Finance (Trade Finance)
    • Average Ticket Size: $100K
    • Average Asset Maturity: 120 days, Min 21 days and max 180 days
    • Expect Default Rate: <1%
    • Expected borrowing rate on senior tranche (on-chain): 7.5%

  • Expected lending rate to end borrower (off-chain): 10% -15%

Taking into consideration all the points expressed above, we would love to have the support of the community on this application. For Defactor but also Centrifuge, this opportunity is extremely important and we hope to continue developing our strategic partnership with the Centrifuge community and ecosystem.

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Thanks for sharing an updated pop @AleG and hopefully being the first to go through the new POP process as approved by the cfg community. I am personally very excited for this pool and could not think of a more ideal Pilot pool to test the rails and start spinning the Centrifuge chain pools! Please let me know how I can help!

I really like the enthusiasm of the Defactor Team and @AleG! Hopefully the rest of the community agrees and @mark_hergen of the Credit Group can show priority to this POP submission as both the first pilot pool to launch and first POP analysis by the Credit Group!

Also shoutout to @jamest from the Defactor team for making this fantastic Dune Dashboard with Centrifuge. Those contracts are not easy to navigate :tada:
https://dune.com/j1002/centrifuge

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Thanks for this background and the updated PoP. I share the sentiment to continue to grow the partnership here and second the importance of prioritizing this credit review. We’ll discuss internally today and come back the following week to discuss timeline and next steps.

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Thanks for the shoutout Jay!

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