How it works

What are the basics?

Bridging the Gap between DeFi and SME Funding

Florence Finance is a decentralized finance ("DeFi") platform that allows you to put excess stablecoin liquidity to work to fund real-world loans & earn real-world yield. Florence Finance uses stablecoin commitments to fund loans to real-world businesses and distributes the real-world yield back to the stablecoin funders in the most efficient and transparent manner possible.

In its most basic form, the Florence Finance protocol (as depicted above) acts as a bridge between two separate ecosystems. 1) DeFi (i.e what happens on-chain) and 2) What happens in the real world (off-chain). So let's look at what happens on each side of the protocol:

DeFi (on-chain)

  • Users commit stablecoins to the protocol in return for receipt tokens (flrEUR or Loan Vault Tokens)

  • The protocol keeps on-chain immutable and continuously verifiable records of any & all transactions and token balances

  • The protocol returns yield and rewards to the users and whilst liquidity is facilitated through secondary markets

Real World (off-chain)

  • The protocol provides SME lending platforms (Delegates) Euros (FIAT)

  • The SME lending platforms (Delegates) use the Euros to provide loans to SMEs which are administered by the SME Lending platforms (Delegates) and in turn act as collateral to the protocol

  • The loans are repaid with interest to the SME lending platform

  • Interest and principal flow back to the protocol to be distributed back to users

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