We are bringing crypto loans backed by Real World Assets on-Chain, aiming to close the $5.2 Trillion lending gap for 131 million MSME in emerging markets. 1-Participants The NURVIA protocol has three key roles: Lending businesses or Borrowers, Lenders or Investors, and Business Auditors. Lending businesses or Borrowers are participants who seek financing from NURVIA, and they propose Borrower Pools to be assessed by the network. Borrower Pools are smart contracts that contain the terms a Borrower seeks for their loans, such as the interest rate and repayment schedule. Lenders are participants who provide crypto capital to the protocol to be utilized by Borrowers. There are two ways to become a Lender on NURVIA—as a Backer or as a Liquidity Provider—based on one’s desired level of involvement, risk tolerance, and potential yields. Investors assess individual Borrower Pools, decide whether to invest in them directly with first-loss capital, and earn the protocol’s highest yields for doing so. Liquidity Providers supply second-loss capital to the Senior Pool, which automatically allocates its funds across all Borrower Pools according to the assessment of Investors. Business Auditors vote to approve Lending businesses, a required step before they can propose a Borrower Pool to Backers. Business Auditors applied to become auditors on NURVIA and are randomly selected by the protocol to provide a human-level check guarding against fraudulent activity and earn rewards in exchange for conducting this work.
2-How NURVIA works for: a-Loans with collateral • Nurvia partners with a credit financing boutique to structure a deal with a fintech company. • After all parties have agreed on the terms of the debt facility, the deal is created on the Nurvia marketplace. • Once the lenders/investors subscribe to and finance the junior tranche, the senior tranche is financed by the liquidity pool. • The deal is then registered at the local registry and issued and financed on-chain. • The fintech receives the financing in BUSD on Binance, converts it into local currency, and originates loans to the end client. • These loans are then provided as collateral to the Nurvia deal.
b-Loans without collateral The protocol works by extending credit lines to lending businesses on NURVIA App. These businesses use their credit lines to draw down stablecoins such as BUSD from the pool, and then they exchange it for fiat and deploy it on the ground in their local markets. In this way, the protocol provides the utility of crypto — specifically, its global access to capital — while leaving the actual loan origination and servicing to the businesses best equipped to handle it. On the investor side, crypto holders can deposit into the pool to earn yield. As the lending businesses make their interest payments back to the protocol, they’re immediately disbursed to all investors. A Risk Tokenized Loan is a structured financial product designed to do the following: i. Enable SMEs and reputable lending businesses to ask for a loan by issuing a Risk Tokenized Loan accessible to retail ii. Deploy money collected from lenders/investors and Risk Tokenized Loan purchasers to generate interest on principal in overcollateralized DeFi margin lending markets on Moonbeam and Moonriver optimized by Yieldthy. iii. Swap interest for Risk Tokenized Loan: the interest generated by the loan is given as funding to SMEs and reputable lending businesses, while the retail purchasers of the loan earn tokens iv. At loan maturity, loan underwriters and RTL buyers are returned their principal plus interests While the loans may generate just 8% to 15% in interest, which as mentioned above is nothing special, the Risk Tokenized Loan they are swapped for could be 100x or even 1,000x. With the loan, retail only captures 15% of the growth in the swapped Risk Tokenized Loan. So, a 100x translates to 1,000% nor 10,000%. Even then, 1,000% is far, far more exciting than 15%, yet it does not risk principal funds. Of course, the swapped Risk Tokenized Loan may go to 0, which is the key reason retail has been aversive to lending to begin with. However, with the Risk Tokenized Loan, the principal was never exposed to loans. So even if a swapped loan reaches -100%, the net return in fact leads is a 1x return, essentially no change in portfolio.
3-Decentralized Trust In order to determine how to allocate capital from the Senior Pool, the protocol uses the principle of "Decentralized Trust." This means that while the protocol doesn't trust any individual Backer or Business Auditor, it does trust the collective actions of many of them. At a high level: when more Backers supply to a given Borrower Pool, the Senior Pool increases the ratio with which it adds leverage. Because this approach relies on counting individual Backers, the protocol must ensure they are in fact represented by different people. Therefore, all Backers, Lending Businesses, and Business Auditors require a "unique entity check" to participate (see below).