Credit Origination

The credit process begins when a borrower, such as a business or individual, requests financing. A credit analysis is conducted to assess the risk associated with the borrower, ensuring that the terms are favorable and secure for the investor. For institutional clients like businesses, trade finance operations may involve collateralizing future receivables, such as commercial notes or franchise payments, while retail credit operations focus on securing individual debts like salary loans or installment payments.

Issuance of Financial Instruments

Once the credit terms are approved, the securitizer issues financial instruments like debentures, or CRs. These are tokenized into digital assets that represent the receivables or debt obligations associated with the credit operation.
The tokenization process enables the seamless transfer, trade, and management of these assets on the blockchain, providing transparency and reducing operational risks.

Capital Investment and Disbursement

Investors purchase the tokenized assets, providing the necessary capital for the credit operation. The funds are held in segregated escrow accounts to ensure secure and transparent capital management.
Once the investment is secured, the funds are disbursed to the borrower. Smart contracts automate this process, ensuring that the disbursement occurs according to predefined conditions.

Collateralization and Risk Management

To secure the investment, the credit instruments are collateralized by future receivables or other assets. For example, in trade finance, these receivables might come from future sales, while in salary loans, the collateral is the borrower's salary, which is deducted via payroll.
The collateralized assets ensure that investors are protected in case of default, reducing the risk exposure and providing security to the operation.

Repayment and Collections

Repayments are automated through smart contracts. Depending on the type of credit, repayments may be collected via payroll deductions, receivables retention from sales, or other structured repayment methods.
For example, in trade finance or franchise financing, repayments come from future revenues. For salary loans, repayments are deducted directly from the employee's salary. These repayments are directed to the appropriate accounts managed by the securitizer.

Distribution to Investors

As repayments are collected, the smart contracts automatically distribute the returns to investors. These returns include both the principal and any accrued interest or fees, ensuring a seamless flow of capital back to the investors.
The process is fully transparent, with all transactions recorded on the blockchain, allowing investors to track their investments and monitor the performance of their assets in real-time.