Frequently Asked Questions

Centrifuge is a decentralized asset financing protocol. It connects decentralized finance (Defi) with real-world assets while trying to lower the cost of capital for small and mid-size enterprises (SMEs) and provide investors with a stable source of income. The main goal of the project is to generate profits that are not tied to volatile crypto assets, the developers are pursuing the task of transferring real monetary value from fiat to cryptocurrencies.

We have partnered with them to facilitate the onboarding process of real-world asset originators to the Centrifuge platform. This means that they host liquidity pools on our behalf which we use to fund AOs. Through our protocol, real-world asset originators and DeFi lenders seeking to connect through Centrifuge's platform will be able to benefit from enhanced KYC processes, insurance protection, and asset authentication procedures.

Algorand has given Defactor a grant to build services on their platform. This will take the initial form of liquidity pools but as time progresses, we aim to build up all our services on Alogorand’s blockchain. They have a cheaper carbon-neutral platform and unique pure proof-of-stake consensus mechanism that solves for the “blockchain trilemma” by achieving both security and scalability on a decentralized protocol and has been operating without a second of downtime since it went live in 2019.

$FACTR is the native token of Defactor. We believe that a well-designed token is the best means of coordinating a network, aligning interests, and incentivising ecosystem growth.

The $FACTR token is a universal requirement among both the RWAOs and the Liquidity providers. RWAOs must pay a fee of $FACTR for platform access as well as a proportion of the funds that they receive to get access to the platform will be paid through $FACTR and locked in during their funding term. For Liquidity Providers, $FACTR will be used to stake as well as participate in the governance of Defactor which allows token holders to signal and support the operations of the ecosystem and guide decisions. An example of how token holders will be able to get involved is when there is a new asset class, token holders can aid in the decision to onboard the asset or not.

The $FACTR token is available to be bought on Uniswap (ERC-20) and PancakeSwap (BEP-20). Read this article for more information.

The Token model is Buyback-and-Make. Revenue generated by the platform may be used to buyback $FACTR from exchanges and distribute to positive actors in the ecosystem (e;g., stakers, nodes). This creates buy pressure on the token while maintaining the benefits of continued issuance and rewards for positive ecosystem actors. This ensures that there is always an incentive to generate revenue and growth for the system while maintaining the benefits of a capped token supply. This is a key-value accrual mechanism for the token holders and the ecosystem as a whole.

We conduct extremely thorough due diligence which includes detailed relevant asset information, KYC and AML checks. We also reach out to on and off-chain businesses that are providing complementary services such as parametric insurance, credit reporting, open banking and collections management to ensure that there is a full suite of services and products available to investors and RWAOs via the platform.

A risk assessment will be performed, and each asset assigned a credit risk score. The score is a key input into the collateral manager which will then determine the level of
funding available against that asset.

For each pool, a set of criteria are defined (e.g.,. limits that are required to ensure that
the risk within a pool is not weighted in a certain direction). An example is the Debtor concentration limit: the pool must not contain more than a given % of assets owned by a specific debtor.

Defactor will audit the premises where the assets are stored and deem if they can be kept there or if they need to be taken to secure premises. Either way, the assets will be somewhere secure, safe and monitored to ensure all parties are protected and to maintain trust, security and reliability.

Asset Originator is an entity that aggregates assets. In simple terms it is a legal establishment, such as a business, that consistently has a flow of incoming assets. An Asset Originator can also be referred to as a Real-World Asset Originator.

A liquidity pool can be thought of as a crowdsourced ‘pot’ of digital assets which are locked into a smart contract that is used to facilitate trades between said assets on a decentralised exchange (DEX). Liquidity providers earn a yield in the form of an APY proportional return to the principal sum invested.

Liquidity providers use stablecoins to stake in our pools which are hosted on Centrifuge. We ‘tokenise’ the assets from the AO into NFTs and send them to the liquidity pools as collateral. Then after the fixed period is over, the Liquidity Provider will receive a fixed return on investment.

Tokenomics is a term formed from two words- token and economics thus making Tokenomics. Essentially, it describes the economics of a token and refers to all of a crypto token’s features that make it desirable to investors.This includes but is not limited to, the supply and demand, the utility of the token, token design being in alignment with project goals and stakeholder’s beliefs etc

P2P lending refers to Peer-to-Peer lending which enables individuals to obtain loans directly from one another and cutting out the middleman which is traditional financial institutions.

This stands for Non Fungible Token which means a unique digital identifier that cannot be copied, substituted, or subdivided, that is recorded in a blockchain, and that is used to certify authenticity and ownership (as of a specific digital asset and specific rights relating to it).

API stands for Application Programming Interface. An API is a connection between computers or between computer programs. It is a type of software interface, offering a service to other pieces of software.

A stablecoin is a cryptocurrency that has its value pegged to an asset, usually fiat or a commodity. Currently, the top stablecoins are USD Tether (USDT), USD Coin (USDC) and Binance USD (BUSD), each of which is tied to the US Dollar. Each stablecoin is pegged to the US dollar and its issuer allows users to redeem 1 unit of the issued stablecoin for 1 US dollar.