DeFi-Powered Credit Facility

The DeFi-powered credit facility is the heart of MintDeals. Businesses can borrow against the collateral collected from membership fees, allowing them to access liquidity without traditional banking hurdles. This facility ensures that businesses have the funds they need to maintain operations, even during cash flow crunches.

Credit Limit Determination

The credit limit available for each business starts as a percentage derived from the stablecoin collateral and varies due to other factors such as credit score, availability, among other metrics. This ensures that businesses can only borrow within their and the platform's means, reducing the risk of default while maintaining the platform’s overall stability.

Interest Rates and Borrowing

The interest rate charged to businesses that borrow via the Credit Manager, will be slightly higher than the current JustLend borrow rates, ensuring that businesses repay more. This interest contributes to the platform’s sustainability, covering potential risks and ensuring that the credit facility continues to remain viable.

Bitcoin Collateral and Liquidation

A portion of the collateral is held in Bitcoin(BTC), which not only diversifies the platform’s assets but also provides a potential growth mechanism as BTC’s value increases. If necessary, this BTC collateral can be manually liquidated in parts to cover defaults, reducing risk and maintaining overall platform stability.

Risk Management and Default Handling

To avoid liquidation events, MintDeals sets its borrow limit lower than JustLend’s maximum. If a business still defaults, not repaying for some time, the platform's Credit Manager may liquidate some of the accumulated BTC collateral to cover or reduce the outstanding debt. Alternatively, since a portion of revenue will be allocated to a reserve this can be used to help reduce the loan, ensuring the BTC remains safe for longer.

This risk management strategy ensures that the platform remains stable and secure for all users. Additional strategies will be implemented in the future, relational to MintDeals' usage and growth.