⚙️Architecture
High Level Overview
Last updated
High Level Overview
Last updated
At the heart of the Florence Finance protocol lies the Loan Vault. The Loan Vault is based on an existing DeFi primitive (the recently finalized EIP-4626 standard) that has been augmented to suit our stated purpose. The Loan Vault is the ledger of reference for the funding that takes place on-chain whilst simultaneously acting as the on-chain manifestation of the real-world lending activity that Florence Finance is engaged in. In that manner, the Loan Vault allows for fractionalized funding of the underlying lending activity while keeping everything hyper-transparent and continuously auditable.
A real-world borrower (Delegate) can create a funding request in the Loan Vault to match real-world loan agreements that it intends to enter into and fund. Such funding requests can be funded by Whitelisted (primary) funders with stablecoins in return for which they receive Loan Vault (receipt) tokens and an equal amount of flrEUR tokens are created in the Vault.
Loan Vault tokens can be exchanged for flrEUR tokens in the Loan Vault (at the prevailing exchange rate) which in turn can be used to participate in other Loan Vaults by exchanging them for other Loan Vault tokens, staking them in the flrEUR Staking pool to earn FFM rewards or exiting the platform by exchanging them back to stablecoins through the treasury function or the third part liquidity pool.
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Interaction
Description
1
Create Funding request. A Delegate can call the funding request function through the admin panel and create a funding request once a fundable credit proposal has been received/approved by such Delegate. Such funding requests can then be kept open until fully funded.
2
Primary Funding. Whitelisted Primary Funders can commit stablecoins directly to the open funding requests in the Loan Vaults to secure Loan Vault tokens which are issued 1:1 their commitment in EUR.
3
flrEUR swap function. Existing Loan Vault Tokens can be swapped at any point in time (gas-less transaction) via the flrEUR swap function for flrEUR tokens and visa versa. flrEUR tokens are the “currency” of the protocol and allow for switching to alternate Loan Vault exposure, farming of FFM through flrEUR staking pool, and/or exiting the protocol back to Stablecoins via the 3rd party liquidity pool.
4
Interest accrual & exchange rate calculation. This is the heart of the Loan Vault architecture, the ledger of the Laon Vault if you will. The Loan Vault keeps track of outstanding principal, accrued interest as well as all outstanding Loan Vault and flrEUR tokens so as to maintain the on-chain accountability of our protocol.
5
Interest Payment. As interest accrual differs from actual (real-world) interest payments the two are separated and actual payments are recorded on-chain through the Interest Payment function which in turn creates a quotum for flrEUR that can be redeemed/burnt through the Treasury.
6
Principal Repayment. Principal (real-world) re-payments are recorded on-chain through the Principal repayment function which in turn creates a quotum for flrEUR that can be redeemed/burnt through the Treasury.
7
Credit write-down function. Non-payment of interest constitutes an event of default. In such cases, the Delegate will seek to make an assessment of the likely credit impact and charge such assessed loss to the first loss reserve or directly to the Loan Vault and Staking pool by burning a commensurate amount of flrEUR.
8
Credit write-up. In the event the recovery from default is greater than the amount “written down” upon the occurrence of the default, the Delegate will compensate the Loan Vault by adding such amount back to the treasury for redemption and minting corresponding flrEUR back into the Loan Vault.
