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Lending Pool for Loan Margin
As just mentioned, the Risk Tokenized Loan generates funding for startups by using money generated by retail in margin funding activities, insured and over collateralized.
Margin funding isn’t a new concept. There’s almost $800 billion in margin funding in traditional markets. Margin funding isn’t new to crypto either. Exchanges companies like BlockFi and Celsius have been providing this for a while. It has now taken center stage with the DeFi surge.
There is an instant market tap worth billions of dollars.
Margin funding is essentially money used by traders for leverage. To do so, traders have to provide over-collateralization, with the standard being 200%. While at the initiation of the Risk Tokenized Loan we will work with industry providers that are insured and overcollateralized, we will launch our own platform to internalize the margin supply Risk Tokenized Loan creates; this will be in the form of a lending platform.
Origination fees will be collected, per industry standards, and added to the reward pool. Origination fees are the costs charged upon interest, to borrowers.
NEPRI is working on launching a single platform that offers venture funding in tiered risk levels. In the meantime, we will put our theory of retail being excited to participate in loan funding if the risk level can be reduced.
Our intent is to create a single platform that offers retail exposure to reputable lending businesses financing SMEs that are working on everything from finance, food, and insurance to healthcare and transportation. Some of these are best if issued with loans. While their nature as loans will carry risk, the framework with which the platform will conduct the fundraise will enable varying levels of downside protection.
Personal finance is a rapidly growing market. It crossed the $1 trillion mark in 2020, due to a near 50% growth over the past 12 months. It’s incredibly rare for a market of this size to grow at this pace, but it’s reasonable given there’s great wealth in retail that is now being applied towards growth. However, retail makes up less than 1% of the $300B global venture investment market. NEPRI is structuring the RTL to create a pathway for far greater retail involvement in venture funding by greatly reducing the risk factor. This is done by capitalizing on the stable interest generation capacity of CeFi and DeFi.
Interest generated is swapped for early-stage loans, and principal is returned at loan maturity. While 8% to 15% is unappealing to retail as it’s a return that below the current 10-year average returns of the S&P500, the possibility to have that 8% to 15% be multiplied by 100 is a value proposition that offers incredible excitement, capable of generating a rapid influx of users.
Last modified 8mo ago
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