Frequently Asked Questions

What is Defactor?
Defactor is a platform and ecosystem that provides a gateway for traditional businesses to access the billions of dollars currently available in Decentralized Finance (Defi) liquidity pools offering a pipeline of real-world assets that can bring enormous value to the Defi ecosystem.

Also, through the Defactor ecosystem, we will spawn new business models and new financial products and services that are Defi based. Defactor will help cement Defi as a true competitor to traditional finance.

What Problem does Defactor solve?
More and more RWAOs are trying to make use of the benefits of Defi protocols. Unfortunately, these RWAOs are struggling to make this transition due to cost as well as a lack of infrastructure and expertise. As such, most RWAOs are forced to manage transactions and move payments through Defi protocols manually. This is both expensive and inefficient and is a barrier to growth. Defactor will provide the technology to help RWAOs to digitise their Defi operations, as well as the pathways and bridges needed to connect the players in these markets.
Why are you called Defactor?
The name Defactor represents two parts: the ‘De’ stands for decentralised, and ‘Factor’ describes a form of financing called factoring. Together they form ‘Defactor’ a bridge between decentralised and traditional finance.
How to apply?
Initially, an RWAO will have to create an account through this link and provide information relevant to the asset class and company in order to create a profile. Then, Defactor will require relevant KYC and AML information so that we can maximise the safety of everyone involved in this process. Once this information is received and confirmed, we will walk you through the onboarding process. Our dedicated team are there to make sure all parties involved understand what the next steps are and to solidify expectations around the process.
How does Defactor work?
Defactor has essentially two main components that work in unison. The first are the Real World Asset Originators (RWAO) which is any business or legal entity that has assets. The second are the Liquidity providers, these are people who provide tokens into a funding pool and receive an additional % of their token back. There are two ways RWAOs can access our platform, either through the normal financing route (used by larger businesses) or through the Springpad which is used by SMEs.

First, the asset originator will be required to upload their asset information into the Defactor platform. Depending on the asset class, different data will be supplied via the suite of APIs made available or through the Funding Portal which will allow low volume RWAOs with limited tech capabilities to enter key information required for funding for each asset class.

Once the asset’s information has been accepted, a comprehensive risk assessment will be performed, and each asset assigned a credit risk score. This score is a key input into the collateral manager, which will determine the funding level available against that asset.

For each pool, a set of limits on risk will be defined to ensure that it is not exceeding a certain % threshold to minimise risk. An example criterion is that a pool must not contain more than a given % of assets owned by a specific debtor. The Funding Manager will ensure compliance and The Funding Hub will keep track of all assets that are funded; the value of funding; when funding occurred when repayment is due; what has been repaid and when.

The funding hub will also provide the fiat to crypto on/off-ramp and make sure all transactional movements across the Defactor platform are logged.

In addition, they will reconcile payments and create alerts for overdue payments which will trigger the Liquidator if a delinquency or default rate occurs. The Liquidator will connect to the Collateral Manager to ensure any collateral is secured from the RWAO for the investors.

On the flip side of this equation are the Liquidity Providers (investors) who provide the funds for RWAOs to use and get paid an APY % return which is variable on the amount of time their capital is locked in staking.

Validated RWAOs will be required to take part in an investor showcase as part of the funding process. RWAOs will be asked to create promotional material which explains their business, team, funding requirements and how that funding will be used. This showcase provides a chance for the community to interact with the RWAO in order to bring transparency to investors.

What is Springpad?
The Springpad is our launchpad to onboard smaller asset originators and gives them access to Defi lending. For companies looking to test the deep Defi waters, our Springpad will provide a fast-track process to test how decentralized lending works.

It will also serve as a “sandbox” to test new asset classes such as NFTs. Currently , NFTs are going through a rapid adoption phase. The development of new digital economies will provide opportunities for funding to holders of these new asset classes. Now, holders are looking for alternatives to obtain liquidity without the need to sell their assets. This is something that Defactor has recognized as an opportunity.

We believe the Springpad is going to bring trust and belief to our community. The success of the Springpad is going to give people faith in this new era of lending, as there will be real-life case studies showing that our vision is not only possible, but it is optimal for businesses that cannot access lending services through traditional finance.

Who can apply?
The general applicant to Springpad are SMEs with little or no experience with this type of funding. There is also a general max funding amount of $50,000 and a max funding period of 60 days.

Springpad allows businesses to dip their toes into defi funding and if successful and want more, they will progress onto the usual AO route and larger sums of liquidity can be provided.

What is Centrifuge?
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.
Centrifuge relationship
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
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 Algorand’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.
What is the utility of the $FACTR token?
$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 what is 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.

How do I buy $FACTR tokens?
$FACTR is available on two blockchain networks, Ethereum and Binance Smart Chain (BSC). Uniswap is a DEX built on the Ethereum network for ERC-20 tokens. PancakeSwap is built on BSC for BEP-20 tokens. The main consideration to consider when choosing a blockchain is transactional fees.

There are many different types of wallets, but most fall into two main categories: hot wallets and cold wallets. The easiest to use and access online, is known as a hot wallet. There are safer hardware wallets, such as Ledger and Trezor which are cold wallets, but they are more difficult to use and can be costly.

Setting Up A Hot Wallet

1). Download MetaMask or other hot wallet providers on the Apple App Store or Google Play or get the browser extension on Google Chrome.

2). Next, you will have to create a password that is stored locally in your browser. This means that if someone has access to your laptop/phone they will need the password to access the MetaMask account. If you import your wallet to another device, using the seed phrase, this password will not be attached to it. It is still important to choose a strong password and store it in a safe place.

3). The next step is to buy BNB on a CEX and withdraw it from your MetaMask wallet. Usually, you can find a ‘Withdraw’ button in the overview of your account. On the withdrawal request page you must select the ‘Binance Smart Chain’ (BSC) network. The exchange might ask for the token type too, which is BEP-20. It is extremely important that you always select the correct network because selecting the incorrect network can result in a loss of all your funds.

4) Go to the PancakeSwap DEX. Select “Connect Wallet”, marked in green below. You will be prompted to connect your wallet through the MetaMask extension and then connect to the BSC network.

5) Select BNB in the first input bar. Select $FACTR in the second input bar, by copy and pasting the address shown below. FACTR token address:

0xdefac16715671b7b6aeeFE012125f1E19Ee4b7d7

6) Finally, while you own $FACTR tokens, you will need to import the token to MetaMask to view them in your wallet. Select ‘Import Token’ in MetaMask. Copy and paste the $FACTR token address to the ‘Token Address’ bar. Once you import the tokens, you will be able to see your balance.

For a more detailed explanation click here

What is the token model?
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.
How do you build trust and mitigate risk on the platform?
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.
How are the risk levels of RWAOs calculated?
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.

Where are the RWAs stored after being approved for collateral?
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.
What is an Asset Originator?
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.
What is a Liquidity pool?
A liquidity pool can be thought of as a ‘pot’ of digital assets which are locked into a smart contract. Liquidity providers earn a yield in the form of an APY pro rata return on the principle invested.
What is a Liquidity pool in the context of real world assets?
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.
What is Tokenomics?
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.
What is P2P lending?
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.
What is an NFT?
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)
What is an API?
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.
What is a Stablecoin?
A Stablecoin is a crypto asset that is designed to have a relatively stable price and is supposed to also reflect an external reference. An example would be that Bitcoin is referred to as the commodity Gold and Etherum is referred to as Silver.
What is a Ledger?
A ledger is a book or collection of financial accounts.