The decentralized finance (DeFi) ecosystem continues to witness increasing growth. Its expansive growth calls for applying several features of traditional finance (TradFi) to it. Since DeFi is created to do what TradFi does and even more, incorporating loans is one of the latest developments. In DeFi, cryptocurrencies are the loan assets, unlike TradFi where fiat currencies are used as loan assets.
Several DeFi lending protocols have emerged as a source of capital for crypto institutions; this article explores the uniqueness of Clearpool (CPOOL), a DeFi platform designed for institutional borrowers and decentralized lenders.
What is Clearpool?
In a video interview with Toya Zhang, CMO of BIT, Robert Alcorn, the founder of Clearpool, succinctly defined Clearpool as a decentralized marketplace for uncollateralized liquidity for institutions.
The above definition depicts Clearpool as a decentralized capital market that allows institutional borrowers to access unsecured loans for the DeFi ecosystem. Through Clearpool, holders can stake, vote, and earn rewards.
Clearpool protocol is built on the Ethereum and Polygon blockchains and aims to become the most dynamic credit market for unsecured liquidity. According to the Clearpool whitepaper, digital asset institutions, such as crypto hedge funds, market makers, and trading desks, do not have the same access to capital as their traditional counterparts. As such, Clearpool enables institutions to access unsecured liquidity, eliminates liquidation risk, and creates attractive risk-adjusted return opportunities for liquidity providers.
How does Clearpool Works?
Although there are several DeFi lending protocols to choose from, Clearpool’s decentralized capital markets set it apart from the rest. For institutional borrowers to gain access to unsecured liquidity on the Clearpool protocol, they must first become whitelisted. The whitelisting process involves the following:
- Know-your-customer (KYC) procedure
- Anti-money laundering (AML) check
- A credit risk assessment through Credora
- Agreeing to the Clearpool terms & conditions and
- Staking some amount of $CPOOL tokens, after which a pool will then be launched.
All whitelisting is currently processed by the Clearpool protocol team and their credit risk assessment partner (Credora). $CPOOL token holders can also monitor this process through an on-chain governance model in the future. Once a whitelisting process is successful, the borrower's pool becomes visible on the protocol's central dashboard, where liquidity providers (LP) can view and fund it.
Going by the Clearpool whitepaper, anybody can be a liquidity provider (LP) on Clearpool. When connected to the Clearpool app via web3, LPs can view all whitelisted borrowers and the details for each pool. Selecting a pool and supplying liquidity is a simple process, and when doing so, the liquidity provider will receive LP tokens called cpTokens.
Clearpool liquidity pools are borrower-specific, i.e., each pool has only one borrower. Whitelisted borrowers can open uncollateralized positions instead of the 150%-200% over collateralized positions common in the DeFi space. Although 500,000 $CPOOL must be staked to open a position, borrowers are not exposed to market volatility that could result in liquidation.
The Clearpool Token
$CPOOL is the native token asset for the Clearpool protocol, doubling as a governance and utility token. As an ERC-20 token built on the Ethereum blockchain with a maximum total supply of 1 Billion, staking $CPOOL is a key requirement for borrowers, and $CPOOL is also used as a reward for lenders.
The Clearpool Team
The leadership team of Clearpool protocol consists of experienced professionals with impressive backgrounds in the traditional finance, blockchain, fintech, and internet sector.
Below are the senior leadership team of Clearpool:
1. Robert Alcorn, CFA - Co-Founder & CEO
2. Jakob Kronbichler - Co-Founder & CCO
3. Alessio Quaglini - Co-Founder & Senior Advisor
4. Vadim Zolotokrylin - CTO & Product Owner
For further reading on the Clearpool protocol, visit the official website here.
About BIT Crypto Exchange
BIT is a full-featured cryptocurrency exchange that is designed for use by professionals. It provides services such as the execution of trading strategies, price discovery, and liquidity provision. BIT is always working to encourage the creation of innovative new financial products, improve the trading tools available to users, and offer a wide variety of tokens. Trade with confidence, knowing that the platform is built with institutional-grade security and risk management measures in place. Sign up for BIT and switch on your future.
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