FAQ

General

Product in few words

Credix is the first decentralized capital markets ecosystem designed for debt financing and credit. We are building the future of global credit markets.

What is Credix?

Credix introduces a decentralized debt capital markets ecosystem where asset originators can tokenize and securitize their assets, and subsequently finance them through decentralized credit markets. Transforming ordinarily illiquid assets into more liquid ones. Digital Asset Institutions and traditional private credit institutions can now access digital real-world assets investment opportunities through a capital-efficient, programmable global infrastructure. The underlying blockchain technology can take on core functions such as custody, registry, and settlement, eliminating the need for rent-seeking actors. This is resulting in a lower cost of capital, and a more efficient and transparent process.

How can I participate in Credix?

• Participating as a liquidity provider. A diversified and passive investment strategy to get access to private credit opportunities. Your investment is allocated to all senior tranches of all deals within a market. Want to start LP'ing? Go to Start here!

• Participating as an underwriter. Our active; high-return, higher-risk, investment strategy. You allocate your investment in specific mezzanine/junior tranches of deals.

• Participating as a borrower. If you are a FinTech lending company you can receive debt financing from the Credix platform.

Investors

Who can invest in the Credix platform? What is the definition of an accredited investor?

Credix only accepts investments from accredited investors.

In the U.S., “Accredited Investor” is used by the Securities and Exchange Commission (SEC) to refer to financially sophisticated investors who are allowed to trade securities that may be exempt from registration with financial authorities. They are entitled to participate in these investments by satisfying at least one requirement regarding their income, net worth, asset size, governance status, or professional experience.

To qualify as an Accredited Investor, the United States government requires that investors:

• Have an annual income of $200,000 ($300,000 if filing joint) for the last two years with an expectation that their income level will continue

• Or a net worth of $1,000,000 (individually or jointly with a spouse)

• Or a good standing in at least one of the following professional certifications: General Securities Representative license (Series 7), Private Securities Offerings Representative license (Series 82), or Investment Adviser Representative license (Series 65).

For Non-US investors, the investor's country of residence will determine the criteria for eligibility to participate in these investments. Accredited Investors must meet the required thresholds as mandated by the laws of their country of residence since these vary significantly country-to-country depending on laws and regulations.

In some countries, self-certification of requirements is sufficient to be granted access to these investments. In others, investors will need to provide evidence demonstrating that they meet the required income and/or asset threshold either by obtaining verification from a lawyer or accountant or providing backup materials to evidence income or net worth.

To learn more, go tohttps://securitize-investor.zendesk.com/hc/en-us/articles/4407778673687-What-is-the-Securitize-Markets-Accreditation-Policy

How does Credix provide +/- 12% returns?

Credix differentiates itself from other DeFi platforms in the way the yield is generated. Credix’ yield comes from real-world lending, also called RWA (real-world assets). Credix works together with credit FinTechs in emerging markets, who lend to their end-clients at often +30% per annum (given that banks charge even more). The previous year, in Brazil alone, credit FinTechs have lent over 10 billion USD. As those FinTechs are not banks themselves, they have to raise debt capital to finance their own lending operations. In their financing mix, they are always looking for alternative investors, other than local banks and funds. That’s where Credix comes in, connecting investors globally with these FinTechs, who are able to provide attractive, risk-adjusted returns.

Who are today's liquidity providers and underwriters?

What’s a liquidity provider? What’s an underwriter? Learn more about our Stakeholders and become a liquidity provider.

Today we have onboarded over 25 funds, ranging from high networth individuals and family offices to multi-billion dollar hedge funds and credit funds. Check out what MGG investment group (a 4.5B AUM hedge fund) had to say Investor stories: MGG Bayhawk Fund).

What's the risk? How is my investment protected from defaults?

In order to provide the best-suited protection for the liquidity pool investors, there are different ways to mitigate risk, one being the structuring of the deal itself, the other being the loan covenants. A loan covenant is a condition in a commercial loan or bond issue that requires the borrower to fulfill certain conditions or which forbids the borrower from undertaking certain actions. Typically, violation of a covenant may result in a default on the loan being declared, penalties being applied, or the loan being prepaid early.

There are 3 buffer layers besides a wide range of financial covenants.

• 1st, excess spread: the difference between what the FinTech charges their clients and the interest the FinTech has to pay Credix is the first buffer to cover for defaults. This is generally over 130%.

• 2nd, overcollateralization: depending on the historic default rate of the FinTech, we require a certain amount of overcollateralization in the form of credit rights which they assign to Credix SPV. Given that the advance rate is dynamic and potential haircuts are levied on assets underperforming, the originator has an incentive to avoid bad behavior of its end borrowers so that it does not have to provide additional collateral in borrowing base deficiency cases

• 3rd, junior tranches: before FinTech deals go ‘live’ on Credix, they need to be underwritten by our Underwriters. Those underwriters are specialized credit funds who perform the due diligence of the deal and the structure and put their money where their mouth is, subscribing to the junior tranche. Thus, if the first and second protection layers don’t cover a potential (partial) default, the junior tranche investors absorb the loss. In return for this higher risk, the underwriters can also expect higher returns.

Besides these three protection layers, there are financial and portfolio covenants in place (we closely monitor the deals’ performance on a monthly basis), which results in the possibility of liquidating the deal in case of breach of contract. This can happen if we for example see defaults passing a certain threshold, so we can protect the junior and senior tranches. Additionally, as a liquidity provider, your financing is diversified over all senior tranches of all deals in the Credix fintech market, limiting your exposure and risk to one FinTech even more.

How is liquidity managed?

When new credit deals go live, their senior tranche is funded by the liquidity pool where liquidity providers (LPs) deposit USDC. When other LPs invest, or interest/principal repayments come in the available liquidity in the pool increases. Every LP has an initial lockup of 90days on their investment. After this lockup period, you can withdraw your investment + yield if there is liquidity available in the liquidity pool.

Does the liquidity pool compound interest?

Yes. As interest repayments come in from the borrowers, all liquidity provider's positions increase in value. This interest is re-invested in senior tranches of new deals on the platform, thus leading to a compounding effect.

Is there / will there be a token?

Currently, there is no token. Credix will issue governance tokens at a later stage of the platform.

Borrowers

Who can get a loan?

High-quality credit FinTechs and loan originators in emerging countries looking for debt financing to grow their loan portfolio. Want to know if your business is eligible? Apply here today: https://bit.ly/3KcvmxR !

What are the kind of FinTechs that are being financed by Credix?

We work with well-established credit FinTechs that have a senior team, credit history and a good loan tape. Today we have revenue-based financing, auto financing, course financing and SME financing live. Soon we will include agro-financing and payday loans. To date all of them are located in Brazil where we have a local team and partners working with the FinTechs directly. Learn more about our FinTechs (Fintech stories: a55, rethinking revenue-based financing, Fintech stories: Tecredi, auto financing through DeFi).

How are the deals structured?

The Credix deals are generally structured as off-balance sheet, securitization transactions. Meaning that Credix (through its Delaware LLC) purchases a private bond from a local securitization vehicle, managed and monitored by a reputable servicing partner in Brazil. The deal is over-collateralized off-chain, has a junior and senior tranche, and is settled in USDC. There is a fiduciary assignment of the underlying assets, generally receivables (incl. the overcollateral), which are managed today off-chain.

How do you manage collateral requirements?

Our protocol does not require pledging (crypto) collateral. Our protocol and deal structure is backed by off-chain legal contracts and real-world assets (loans, receivables, cars, etc.) as collateral.

How do you hedge FX risk

To mitigate the risk of currency devaluation, FX hedging instruments are purchased with local partners (e.g. banks) and/or technology companies.

How do you screen borrowers and what if they don't repay

Credix conducts the initial due diligence on all borrowers before they are allowed to the platform. The underwriting itself is done by our underwriters (hedge funds, credit funds, etc). Credix provides due diligence information such as company financials, loan book performance, etc.

All on-chain deals are backed by off-chain contracts representing collateral requirements and default procedures.

Technical

Why build on Solana?

Solana was built from scratch, optimizing for scalability and speed from day 0. This translates into an unparalleled number of transaction per seconds and the lowest fees out there. Furhtermore, developers leverage RUST to build smart contracts. Rust is performant but secure (memory safety if you want to be precise) at the same time. Solana’s ecosystem consists of 5000+ total projects, growing an organic community of users and developers. Lastly; Credix has a first mover advantage; being the first DeFi protocol linking the Solana ecosystem to the real-world economy.

How do you secure the protocol?

Our protocol features several layers of security measures:

• Automated audits powered by the Soteria software

• Manual audits by partners such as Halborn and Certik

• Credix only allows KYC/KYB’d investors/borrowers to interact with the protocol (this is enforced on chain by Securitize). Furthermore; the stakeholders should have an on-chain Credix pass (= whitelisting)

Read more about our technical security policy here.

Disclosures and Disclaimer

The information provided herein is for informational purposes only and is subject to change, adjustment, modification, edit, and correction. Past performance is no guarantee of future results, and any projections used are estimates. Projections should not form the basis for any investment decision. All investments carry risk, including the loss of your entire investment. All financial modeling is subject to assumption and error, and Credix reserves the right to modify, alter, and correct. Participation in the Credix protocol, including use or application of any financial model, implies acceptance of these risks, including the risks of error and loss, and waives liability for Credix, its directors, agents, representatives, and assigns.