Borrowers
Borrowers are participants who seek financing from the protocol. They propose deals to depositors and place fixed pools on the Stabledapp.
A firm operating in traditional financial markets looking to raise additional capital through the Acumen Stabledapp would make initial contact through the submission of the borrower onboarding form available on the borrower page of the Acumen website. This would put the borrower into contact with the Acumen internal borrower consulting team. From there, preliminary conversation would be held to assess the firms need for financing, historical performance, and concurrent outstanding debts. Once the firm in question is well acquainted with the Stabledapp borrowing process they would draft up a deal proposal form. This form acts similarly to a term sheet and would include the terms that would define the deal underpinning the Fixed Pool and any pertaining documentation. The terms established in the proposal would be as follows:
Interest Rate: Fixed interest rate APR, e.g. 10%
Principal: Total capital to be borrowed, e.g. US$10M
Loan Term: Length of time until the full principal is due, e.g. 365 days.
Liquidity: Frequency of interest and principal payments, e.g. every 30 days.
Collateral: Assets that can be pledged to back the loan.
These are illustrative terms and will be subject to the specific structure of a deal
Repayment Profiles
Borrowers in the Acumen ecosystem have two types of debt repayment profiles that they can structure their repayment around:
Equal Amortizing: In this type of repayment interest and principal payments are made in equal amounts all the way until the end of the loan according to a schedule with set intervals.
Balloon Repayment: This type of repayment has some amortization with interest and principal being paid throughout the loan term however a percentage of the total sum is left to be paid at the end of the loan term.
Other debt repayment structures can be accommodated depending on the proposed deal.
Institutional Grade Pools
Some borrowers due to either preference or regulatory stipulation choose to only accept financing from institutional investors hence one of the decisions to be made in the Borrower Deal Proposal is whether a pool is institutional grade or open to all depositors.
Fixed Pool Placement
Once the deal proposal form is drafted up there are three stages that follow:
Auditor approval: Auditors evaluate the proposal and either approve or decline the proposal, this process is described in detail on the Auditors page of the docs.
Loan or Bond Agreement: A legal agreement would be drawn up between Acumen DAO S.A de C.V and the Borrower which would define all the terms of the deal, the repayment schedule and any pledged collateral. This agreement would be signed by representatives from the Acumen DAO and the Borrower.
Fixed Pool fulfilment: Upon Auditor approval the Fixed Pool is placed on the Stabledapp and is filled by depositors, this process is described in detail on the Depositors page of the docs.
Capital Deployment and Repayment
Having had the Fixed Pool filled by depositors the Stabledapp smart contract would transfer the USDC, USDT and DAI stablecoins to an off-ramping service provider. This service provider would facilitate the process of exchanging stablecoins into the fiat currency designated in the deal proposal. This fiat currency would subsequently be transferred to the Acumen DAO corporate account at a partner bank in the jurisdiction of El Salvador. The bank would then through an international wire send the funds to the borrower. This is done to make use of the Digital Asset Service provider license, as explained in greater detail on the Regulatory Compliance page of the docs, which allows the Acumen DAO to conduct crypto emissions without tax implications. The borrower would subsequently make interest and principal payments according to the schedule outlined in the deal proposal by wiring the funds to the Acumen DAO corporate account. From here the funds would be on-ramped into the stablecoins the deal is denominated in, either USDC, USDT or DAI proportionally to the amounts deposited and transferred back to the Stabledapp smart contract wallet.
Protocol Fee
In order to maintain a safeguard over depositors always receiving the promised interest payments, the Stabledapp lends out funds at a slightly higher APY rate that what is specified in the proposed deal. The delta, or excess revenues, will be reinvested into improving the protocol, sourcing new deals for future Fixed Pools and rewarding Acumen DAO Members.
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