Challenges of Undercollateralized Lending
Undercollateralized lending in DeFi is challenging due to two main factors:
Credit Risk Assessment: DeFi protocols often lack the tools to properly assess the credit risk of businesses using only on-chain data.
Capital Protection: Without sufficient collateral, it can be difficult to protect loan principals in the event of default.
Improving upon the best practices of both web2 and web3 experts, Satin Finance addresses these issues by introducing traditional finance mechanisms into the DeFi space.
Satin employs a team of seasoned underwriters and risk managers to assess borrowers’ creditworthiness, focusing on real-world businesses with positive cash flow.
Additionally, Satin mitigates risk by integrating a third-party insurance layer that acts as a capital buffer to protect both lenders and the protocol.
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