We held a live AMA with CEO, Ivo Grigorov from Credefi on Monday, 1st November at 9:00 PM (UTC+8). Here’s the recap for those who missed it.
JH | Shin Chan: Before the ama start, can you please introduce yourself and the team background?
Ivo Grigorov: My name is Ivo Grigorov and I am the CEO of Credefi.
Credefi’s team has 40+ years of experience in finance — from private equity funds to commercial and central banks, and we are crypto believers as well, being in the space since 2016. We have been working in leading roles for several commercial banks, private equity funds, asset management institutions and the Central Bank of Bulgaria. In our experience we have seen time and time again the great deficiencies of traditional finance, while witnessing the tremendous growth of DeFi and the opportunities it opens and that’s how the vision of Credefi was born.
We believe DeFi is the future of banking and are quite frustrated that so far it has very little connection with and impact on the real economy, it’s a closed universe. We aim to change that and open a brand-new niche in DeFi by enabling stablecoins to flow to real businesses and earn a fixed and non-crypto-related yield. At the same time we aim to become a gateway to DeFi for SMEs and render obsolete the outdated, bureaucratic and overregulated banking services SMEs now have to cope with, replacing them with quick, flexible and user-friendly funding solution.
Credefi is a first mover in the DeFi space connecting crypto lenders & SME borrowers from the real economy. Our platform enables decentralized and secured lending to portfolios of businesses, protecting lenders while providing them fixed APY that is uncorrelated with crypto markets’ volatility.
Credefi is resolving some of the key challenges in DeFi and TradFi:
- On the DeFi side, DeFi yields are inconsistent, fragile, and evaporate in bear markets and the aftermath of DeFi Winter and the market crash in May ’21 are a clear proof of that. We see that speculative borrowers cannot satisfy DeFi lending supply.
-On the TradFi side, small and medium enterprises are historically underserved by traditional banks and are borrowing at consistently high interest. There are not enough lenders to satisfy SME borrowing demand, pushing SMEs to alternative lending solutions such as peer-to-peer and crowdfunding which are billion-dollar industries in the US and EU.
JH | Shin Chan: Is there anything you can share us the update/news from Credefi?
Ivo Grigorov: Yes we are proud to announce that we are preparing for our IDO on Cardstarter on Nov. 8th and this is where we are focusing currently
JH | Shin Chan:
📣📣📣 (https://t.me/moonwithshinchan) Credefi IDO On CardStarter 💠💠💠
Credefi will launch the IDO on CardStarter
🔹 IDO Registration: 31 October, 11PM (UTC+8)
🔹 IDO Date: 08 November, 11PM (UTC+8)
Credefi is a first mover in the DeFi space, securely connecting Crypto lenders & SME borrowers from the real economy.
thank you for sharing IDO news to our community. 🔥🔥
AMA Twitter Section Begins:
Q1: You say that Credefi’s team is composed of international experts in the financial area in general. Could you give us more details about the people who make up your team, where they have been professionally trained and how they are selected?
Ivo Grigorov: We have chosen people who have impeccable reputation and careers. We have team members which have postgraduate degrees in Banking and Finance from leading universities in Europe and the US (European Business School London, University of Bocconi and Harvard Business School to name a few). The selection of the team members was based on the previous work relations with the co-founders of the project, we have chosen people with a proven academic and professional track records. All of our team members have work for established institutions within the traditional finance sphere for names such as Deloitte, European Central Bank and Rothchield &Co to name few.
Q2: I found that you have a strategic association of EU-accredited financial institutions, which gives them real guarantees. Can you tell us what financial institution you are associated with? And are you planning to reach more such associations?
Ivo Grigorov: We have already established a partnership with an European licensed financial institution, the purpose of the partnership is the collateral management of real-world asset pledges. The name of the financial institution is Credit plus. It has been selected due to its ability to recuperate funds from Non-performing exposures. Indeed we intend to further strengthen our network of partnerships with such financial institutions. It is core scaling our business worldwide.
Q3: I Noticed that CREDI token holders can lend to loan portfolios with risk profiles ranging from low to high risk. So how are risk profiles determined for CREDI holders?
Ivo Grigorov: Through our proprietary risk assessment modules which are part of our three layer security mechanisms, we have developed two distinct scorecards which each borrower undergoes when applying through Credefi. First is our application scorecard the second is our behavioral on chain scorecard, both scores translate into a probability of Default for each borrower. The scorecards include different quantitative and qualitative criteria which are designed to evaluate the creditworthiness of the borrowers and the probability of default on their obligations. Once we have the probability of default we have set different statistical ranges which determine in which portfolio a certain borrower would fall. In short this is the way that they are segmented. Then the lenders can choose in which portfolio they would like to lend given their own risk appetite
Q4: I see that CREDEFI is a loan asset as well as a collateral-based loan. So can you tell us is there a credit score system for the CREDEFI loan system? What provisions will apply? Is there a fixed loan amount (minimum and maximum, terms, interest and collateral)?
Ivo Grigorov: The credit scoring system is designed to include both quantitative and qualitative data. Each borrower undergoes a review and this is how we assess their creditworthiness as well as the risk premium and the collateral requirements. We have structured our operations in such a way to have maximum security of our liquidity providers so we are starting with a guarded launch. Having said that indeed we will have set limits and ranges of the ticket sizes, which are 25k — 100k initially, this is done in order to avoid any concentration risk. The interest and collateral levels are determined based on the risk of default by a certain borrower.
Q5: Credefi offers loans to all users of its network. What are the assets that you have to place as collateral? What is the impact of these loans in the current financial revolution of the network? How accessible are these credits or loans?
Ivo Grigorov: We have designed our product in such a way that it is easily accessible by both lenders and liquidity providers alike. Since we are targeting SMEs from the real world economy we believe that the collateral requirements will be on individual bases, from the beginning we will be accepting pledges on receivables, pledges on real estate etc., as well as crypto.
Telegram Live AMA Begins:
Q6: To be ‘gateway’ for SMEs for crypto lending, should consider users, who have no previous experience in the crypto field. Is your platform suitable for crypto beginners? Or only limited to professional users?
Ivo Grigorov: Our platform is designed in such a way that it is suitable for both beginners and seasoned crypto users alike. We believe that in order for SMEs to enter into the space it needs to be as user friendly as possible.
Q7: Key security features will be installed in Credefi Finance to prevent hackers from entering due to the failure of smart contracts. Is Credefi Finance regularly checked for weaknesses?
Ivo Grigorov: Our development team is constantly looking for and acting to resolve any potential vulnerabilities, however small they may be. We would also conduct a bug bounty program after IDO and implement all relevant findings to ensure maximum security of our platform when we launch.
We have recently passed a smart contract audit with Armors Lab — a leading provider of smart contract audit services with a very good reputation. We will be publishing the report soon — please follow our official channels for the latest updates
Q8: Can you explain CreDefi Finance’s Revenue Model? In which ways do you generate revenue/profit?So many projects just like to speak about the long term vision and mission but what are your short terms objectives? What is your f ocusing right now?
Ivo Grigorov: We believe one of the goals of DeFi is to cut the middleman as much as possible and allow money to flow seamlessly and without friction (fees). That’s why we do not do arbitrage between lenders and borrowers and do not have an interest spread — we are not a bank after all! Also we do not leverage our lenders’ capital by staking it on other platforms, etc. — funds go straight to SMEs and lenders have full transparency on where their money is deployed and what projects and companies they are funding.
Of course the platform has to earn revenue to keep the lights on and we do so by charging borrowers a fee when they obtain a loan — this is our only source of revenue.
As to the objectives our short-term goal for us of course would be doing a very successful launch, which we truly believe will happen. last but not least, we strive to release a working product straight after our launch, where our community the benefits of credefi’s fixed and stable apys, while hedging against any volatility. once we have achieve the above, we will move forward towards our progressive expansion globally.
Q9: Burn mechanisms have become quite prevalent within deflationary tokenomics. Firstly, the Swap component, how is it funded and sustainable? Secondly, what is burnt and when is this Credefi ecuted? And finally, how can users benefit and use the Swap feature?
Ivo Grigorov: Our tokenomics is designed and inspired by the industry leaders like AAVE and SUSHI. We have implemented a 2-token economy model, which secures and stabilizes the platform, while increasing APY for our stakers and token holders. Through staking our utility token CREDI in Module X, users will be able to receive higher APY as well as mint our governance token xCREDI. Additionally, we have implemented a buyback and burn mechanism of xCREDI, in order to return part of the revenue generated by the protocol to users.
CREDI is our utility token that will be used to reward activity on the platform and act as an additional security layer by being staked in Module X. We will have a tiered structure for lenders and borrowers, whereby the more CREDI you hold (and stake), the better terms you will receive.
xCREDI is our governance token that will be minted only by staking and burning CREDI in Module X. xCREDI holders will be able to shape the path of Credefi in the future as we move towards a completely decentralized platform.
Q10: Could you really tell us what are the key features that CreDeFi has? And how does it manage to position them above their competing projects quickly?
Ivo Grigorov: Credefi is a unique protocol in many ways. We are pioneers in connecting DeFi with real-world businesses — a challenging task that very few projects have set to achieve so far. What makes us confident we’ll be successful in our mission is the lending mechanism we have developed, which makes our platform secure for lenders and easy-to-use and accessible for SMEs.
More specifically the acceptance of real-world collateral, its proper evaluation and administration in a user-friendly manner for SMEs allow those companies to easily join our platform and enter the DeFi world without fear. On the other hand, for lenders we provide a unique diversification opportunity — earning fixed yields not correlated to the crypto market volatility.
Q11: I see the APY for stablecoins is starting from 10%. So, How does CreDeFi provide this? Is this high APY sustainable? Please also tell us about the CreDeFi revenue model ?
Ivo Grigorov: Our APYs are based on real-life SME lending in different business situations — need of more working capital, launching a new product line, building a new real estate development, requiring bridge financing for a short period of time before a cash inflow, etc. Bridge funding for example often comes at high interest rates which SMEs are happy to pay because of the short period of time of these loans — the percentage interest rate may be high, but the total amount of interest paid is low.
Lenders always face the risk of loan default — it’s not a risk-free investment and of course the higher the loan APY, the higher the risk. However, we have structured a three-layer protection mechanism to protect our lenders as much as possible:
Layer 1 — all borrowers and loan applications are professionally assessed (with validation by Experian) to come up with the “right” amount of interest and collateral needed.
Layer 2 — all loans on our platform will be collateralized, using both crypto and real-world assets as collateral.
Layer 3 — our Security Module that will bridge the time gap between a borrower stopping payment and their collateral being liquidated and funds returned to lenders.