annarubanoff - Tumblr blog

[annarubanoff]

Goldfinch - intro to the project

There are 4 main roles involved in the protocol: 1. Sponsors. 2. Providers of liquidity. 3. Borrowers. 4. Auditors. Let’s take a closer look at Sponsors and Liquidity Providers. Sponsors are the investors of the first loss, they create the capital of the junior tranche. They study the information provided from the pool of borrowers, ask questions to assess whether it is possible to provide a loan. If the borrowers do not pay their loan obligations, they will be the first to lose their investments. Liquidity providers are investors who invest in a senior tranche, in pools of borrowers already verified by sponsors and auditors and have passive income. When liquidity providers deliver to the main pool, they receive an equivalent FIDU amount. Liquidity providers can withdraw funds at any time by exchanging their FIDUs for USDC at an exchange rate based on the Net Asset Value of the Senior Pool minus a 0.5% withdrawal fee. This exchange rate for FIDU increases over time as interest payments return to the main pool. The sponsors have incomparably more work and risks, but in order to stimulate their work, the Goldenfinch protocol provides for the redistribution of income 20% of the nominal share of the senior tranche is redistributed into the junior tranche. Also, 10% of all received% is reserved by the protocol. Redistribution formula from senior to junior tranche: where in — interest rate p — protocol reserve r — leverage ratio j — percentage of redistribution Similarly, for liquidity providers, the effective rate formula will look like this: So we draw conclusions, although sponsors have more risks and work, but there is also a reward in the form of subsidies from liquidity providers.