Combining Silta’s collateral bridges with Rari’s DeFi loan pools will enable DeFi funding for sustainable infrastructure projects
Silta Finance AG and Rari Capital announced a joint partnership to facilitate the over $250 billion DeFi market with access to real-world infrastructure investments. The Silta project enables the provision of on-chain collateral for infrastructure borrowers wishing to access DeFi liquidity. Adapted to the overcollateralized lending model common in DeFi, Silta can work across a wider variety of DeFi protocols, thus unlocking this multi-billion dollar market for infrastructure investments. Together, Silta Finance and Rari Capital will be the first to offer decentralized debt financing for physical assets.
The heavy collateralization ratios used in the DeFi loan pools make DeFi lending inaccessible for funding real-world assets, with typical collateralization ratios ranging from 150% up to 500% or more, and this presents a challenge for infrastructure borrowers. These borrowers are familiar with having to put up real-world collateral, loan covenants with step-in rights, and government guarantees where possible, but having to put down $20 million in collateral to borrow $10 million isn’t something any real-world borrower would undergo.
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Silta solves the problem by lending to borrowers the on-chain collateral they need to borrow from DeFi lending protocols. Co-founder Ben Sheppard explains the vision: “Silta is the DeFi bridge to a sustainable future. We aim to bring in a robust and proven asset class which hasn’t yet been available to the DeFi industry. This will help balance investors’ portfolios with new products which are designed to be resilient against crypto winters.”
Companies seeking funding for infrastructure assets can submit collateral loan applications through the Silta DApp. Each application is assigned with a “Silta score”, a rating based on the risk and other factors of the requested collateral. The Silta DAO then decides whether the loan application should be approved.
With the DAO approval, collateral will be provided in the form of Silta tokens. Tokens are minted and secured in an escrow contract for use in a third party DeFi lending protocol. A security agent signs a collateral lending agreement with the borrower prior to issuance of the Silta collateral tokens.
Through Rari Capital, loan pools can be created for each infrastructure investment approved by the DAO. Once collateral has been submitted into the loan pool, lenders can begin to fill the pool with stablecoins. Once the loan pool has been filled, funding is issued to the borrower in tranches based on the construction profile of the infrastructure project.
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“The Fuse Protocol incubated by Rari Capital is a decentralized open interest rate protocol. By providing users with the ability to create permissionless lending and borrowing environments, Silta will be able to utilize this infrastructure by providing a way of collateralization to be utilized through the endless possibilities of stablecoins in the protocol. It has been truly wonderful getting to know the Silta Finance team, and I am looking forward to working more closely in the future,” says co-founder and core contributor Jack Lipstone at Rari Capital.
Infrastructure financing offers an attractive return on capital and a low rate of default. By bridging DeFi into infrastructure financing, Silta will open up this innovative type of investment opportunity for the DeFi community while also giving DeFi protocols access to real-world markets.
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