By
Temitope Olatunji
April 18th, 2024
Credix Finance’s partnership with Clave is geared toward supporting businesses and consumers in the entire Latin American region.
Decentralized credit marketplace Credix Finance is lending monetary support of up to $150 million to the lending platform Clave. According to Tuesday reports from both firms, the fund will serve as a credit pool that Clave will use to issue loans to businesses and private individuals across Latin America.
Notably, the statement indicates that the $150 million credit pool will come in the form of dollar-pegged stablecoin USDC. However, the credit facility will not be open until 2023.
Credix Finance to Split Credit Pool Into ‘Tranches’
As is common with Credix credit pools, the Clave-focused pool will be split up into what the marketplace calls “tranches.” These tranches represent smaller funds that will be made available by various institutional investors. So, essentially, Credix will be connecting fintech startups to lenders like Clave, who also need capital to improve their lending capabilities. It will also offer investment opportunities to institutional investors. But their yields will vary in line with the risk involved with their tranches.
Speaking about the credit pool, Credix Chief Growth Officer Chaim Finizola confirms that Clave will get the funds (in USDC). That is, via on-chain transactions, and directly into the company’s crypto wallet.
However, the officer then claims that the onus will be on Clave to convert the USDC-denominated funds to any type of traditional currency of its choosing as it services the borrowers.
Expansion Plans and Loan Risks
The Belgium-based Credix Finance is not new to the credit service business. According to DefiLlama data, it has so far, been involved in the credit of over $26 million using USDC on the Solana blockchain.
However, this time, its partnership with Clave is geared toward supporting businesses and consumers in the entire Latin American region. Currently, Clave already originates loans to clients in Argentina and Colombia. However, plans are in motion to set foot in Mexico by 2023.
It is also worth mentioning that Clave’s debt from the Credix credit pool does not have any tangible collateral. The only form of collateral is whatever receivables that come from the borrowers. This was confirmed by Finizola. So, it might be safe to say that the debt is technically unsecured. This is because the debtor is only standing in with its good reputation and financial standing without as much as a valuable asset to fund the loan in case a default happens.
Nonetheless, unsecured lending is not unheard of. And while it is standard procedure in traditional finance, it appears to be gradually seeping through into DeFi lending protocols as well.