FAQ

Questions about Cascadius Finance

Q: Is the DeFi market ready for securitization?

DeFi is a new and developing field; lending and loans on DeFi are even more nascent. Our goal is to build the mechanisms to facilitate a (relatively) seamless onramp for traditional financial counterparties. Making it easy to onboard and finding the right partners would allow for an easy transition.

Q: Why package loans into securitizations? Why can't investors just purchase a portfolio of loans outright?

• Assembling loans into a portfolio incurs high search costs. Investors would need to find a sufficient number of loans to operate at large scale for the investment to be worth the cost.

• Retail investors would never be able to operate at scale. For retail investors to participate in an asset, scale would have to be already created.

• A custom-built pool of loans is illiquid. There is no market or counterparties to offload exposure in the pool. Even if there were interested counterparties, each trade would have to be negotiated idiosyncratically and a portion of the pool transferred in a highly manual process.

• A custom pool would not allow for the creation of diverse risk / reward profiles. Securitization makes tranching a logical (and relatively simple) next step, and can cater to a larger pool of participants, both institutional and retail.

Q: How can you guarantee the security of the loan asset on Cascadius? What about PII (personal identifiable information)?

Cascadius (at least initially) will not enforce any specific restrictions on the meta-data and indicative data sent to the platform. Note that the loan entry hosted on Cascadius is not the actual legal loan, but an ERC-721 compatible * proxy to the proceeds produced by the loan. There should be sufficient information to allow marketplace participants to assess and transact, but should not contain any PII.

Q: What are the biggest risks of using Cascadius as the securitization platform?

This is a new and developing space (DeFi). We will do our best to enumerate the capabilities of the platform to prevent misunderstand / misuse.