Systemic Problems We’re Solving

Ecosystem Problems We’re Solving

Issue: Every undercollateralized lending protocol relies on some offchain component from credit score algorithms, oracles, or worst actual legal agreements with KYC
Importance: Without completely cryptonative credit DAOs and protocols have no way of accessing basic financial services like loans, lines of credit, or bonds.
How We Solve It: Building novel DeFi primitives devoted to cryptonative anons & DAOs to give them access to trustless credit. No compromises or exceptions.

Issue: All of DeFi is asset based whether ERC20 or 721s. If your DAO generates millions in fees, there is no way to leverage that except with your illiquid governance token which has different risks than lending to revenue streams.
Importance: Cash flows are the life blood of every business and economy. DeFi must support them in order to unlock its full potential like new types of protocol funding mechanisms and more programmatic DAO operations.
How We Solve It: We invented the Spigot to trustlessly collateralizes cash flows to repay debt automatically.

Issue: Because of the monolithic architecture of most lending protocols, one toxic asset puts the entire protocol at risk causing DAOs to be hyper-conservative
Importance: Ignoring a large portion of the market means small scale DAOs can never access basic infra needed to support their products and governance tokens while lending markets lose out on a significant amount of activity and fees
How We Solve It: With BYOO and customized risk profiles, anyone can easily lend to long tail assets with Debt DAO’s composable infrastructure.

Issue: Existing lending protocols have the same monolithic architecture with centralized governance
Importance: Without composable credit primitives, technical innovation and product development is expensive, time consuming, and hard to integrate.
How We Solve It: Every component of Debt DAO is modularized. The Spigot for collateralizing cash flows allows a multitude of financial products, not just credit to be built on top. Our Lines of Credit allow for unsecured, revenue-based, asset-based, or reputation-based lending by changing a few lines of code.

Issue: investor profit motives force founders into adversarial relationships against their users by trying to extract value from them.
Importance: Focusing on profits > value is a coordination failure that slows innovation across the space and makes crypto apps have even worse UX.
How We Solve It: We provide revenue-based financing as an alternative finacning model to projects where they can still get money to operate without being captured by VCs.

Issue: Using lending pools controlled by a DAO takes away all agency from lenders and borrowers. The DAO can list toxic assets causing lenders to lose their money or arbitrarily change parameters causing borrowers to be liquidated.
Importance: DeFi is about hyper-competition. We shouldn’t be forced into pre-fabricated positions that kills our ability to have a competitive edge.
How We Solve It: Debt DAO lets lenders price their own risk for each borrower’s line of credit and borrower’s can choose which lender offer they want to accept.

Issue: Oracles are one of the biggest systemic risks in DeFi and are a frequent cause of protocol exploits.
Importance: One bad price update, intentional or not, could cause havoc across the ecosystem with mass liquidations, insolvencies, and hacks.
How We Solve It: Our base Line of Credit contract for unsecured lending doesnt require any oracle. For asset based lending we let you choose which oracle is used (BYOO) for the loan allowing various asset types like NFTs, derivatives, or any on/offchain data.

Issue: Because of the monolithic architecture of most lending protocols, one toxic asset puts the entire protocol at risk causing DAOs to be hyper-conservative
Importance: Ignoring a large portion of the market means small scale DAOs can never access basic infra needed to support their products and governance tokens while lending markets lose out on a significant amount of activity and fees
How We Solve It: With BYOO, p2p lending, and customized risk profiles mentioned above anyone can easily lend with or against long tail assets as using Debt DAO’s composable infrastructure.

Issue: Just because price goes down doesnt mean the DAO or protocol it represents has lost fundamental value. Yet most lending protocols will liquidate a DAO borrowing against it’s treasury even if they could repay or top-up after a lengthy governance vote.
Importance: A successful revenue-generating DAO’s borrowing ability shouldnt be hindered by volatile crypto markets run by monkeys
How We Solve It: No liquidations in our core protocol unless you debt is past-due. If you do specify an asset-based loan then we liquidate based on collateral ratios.

Issue: Borrowers and lenders want stability, predictability, and programatic controls so they can accurately project costs and earnings.
Importance: Variable interest rates create higher overhead for managing positions, calculating costs/earnings, assess risk, and maximize profitability.
How We Solve It: Debt DAO has fixed interest rates and fixed terms allowing borrowers and lenders to price their own risk per loan