Why do we need a fixed interest rate? Because the real economy works based on predictability. It’s about knowing the costs of capital in advance. Or it’s about knowing the value of your liabilities.
Lenders define their personal DeFi Fixed-Income Funds in SmartCredit.io. They define what kind of loans they want to invest in and describe their investment rules. Every lender can choose if they prefer short-term lending strategies (with less interest) or long-term lending strategies (with more interest). Every lender can define how much of their portfolio to invest in the shorter-term and/or longer-term.
SmartCredit.io does in the background automated matching of borrowers’ loan requests with lenders’ fixed-income funds.
SmartCredit.io monitors the loan, and if the borrower does not pay or the borrower’s collateral value sinks too much, the loan isliquidated. The borrower's collateral assets in the smart contracts are protected with the oracles - the liquidation process starts only after the oracle will confirm the liquidation.
SmartCredit.io never earns on liquidations—what remains from the liquidation are transferred back to the borrower. This is one of the key differences from our competitors (Aave, Compound, and Maker). Our competitors earn revenue while liquidating the under-collateralized borrower because the collateral is sold at a discount, and the remainder of the collateral value becomes the profit of liquidator bots. Most of these bots are hosted by the respective platforms, and liquidation revenues transfer into the platform revenues; in some months, even 50% of the respective platforms’ revenues.
In case the collateral does not cover the borrower's obligations, the Loss-Provision Fund will pay the gap to the lender.
SmartCredit.io contains a Positions Monitoring System - borrowers can order telegram notifications, in case liquidations probability will increase. This automated feature is available for any user.
Most of DeFi platforms have bank run risk. Why? It's because their maturities are not matched. SmartCredit.io is the opposite - it matches the borrower/lender maturities. It's like a traditional bank, but noncustodial - without the bank run risks.