Clearpool is pleased to announce a new borrower — Banxa, a publicly listed and prominent global financial technology infrastructure provider. Banxa (TSX.V: BNXA, OTCQX: BNXAF) has launched the inaugural Clearpool Credit Vault on the Avalanche Network. The innovative design of Credit Vaults, which have much shorter repayment windows compared to typical RWA Fintech lending platforms, will be attractive to the DeFi lending sector, characterized by its liquid environment and higher yields.
What are Credit Vaults?
While Clearpool’s Permissionless Pools are favored by trading firms and market makers as borrowers, Credit Vaults cater to the influx of new on-chain borrowers, including fintechs and payment companies, looking for stable rates and stickier liquidity. Credit Vaults empower borrowers to set their own terms, and enable higher lending APYs through efficient utilization, increasing lending volume and protocol revenue.
Banxa — short-term bank settlement financing
Banxa is at the forefront of providing fiat-to-crypto gateway solutions, facilitating seamless transactions for users purchasing cryptocurrency on exchanges. Utilizing Banxa’s payment options, such as credit card payments, necessitates immediate order fulfillment despite a typical two-day delay before these payments are processed and settled in Banxa’s bank account. This delay extends to up to five days during weekends and public holidays.
To manage these settlement periods, funds secured through the Credit Vault on Clearpool are designated to bridge the gap, acting as short-term financing for accounts receivable. Unlike traditional receivable financing, which often locks lenders into medium to long-term commitments (six months or longer), primarily in trade and invoice financing, the DeFi sector shows a preference for more liquid investment options. This preference mirrors the flexibility seen in platforms like Aave and Maker.
Clearpool’s innovative approach with its permissionless pool product allows lenders to retain the ability to withdraw their funds at will. The introduction of Credit Vaults aims to balance the need for more stable liquidity by providing DeFi investors access to the most flexible and short-term financial opportunities in the fintech sector.
The structuring of this arrangement was undertaken by Cauris, a credit fund experienced in managing transactions across prominent real-world asset (RWA) DeFi protocols, including Centrifuge, Credix, and Goldfinch. Cauris not only structured this deal but will also oversee the pool’s performance, ensuring security through direct control over designated bank accounts and implementing various critical covenants.
About Banxa’s Credit Vault
APY: 15.5% USDC + AVAX rewards
Withdrawal Window: 7 days
Notification Window: 7 days
Minimum Deposit: USDC 10K
Servicer: Cauris
Furthermore, Cauris has implemented several security measures and covenants:
- Promissory Note: Codifies terms and use of proceeds
- Covenant Compliance: Ensures adherence to contract terms
- Fund Segregation: Controls accounts holding customer funds
- Worldpay Integration: Monitors chargebacks and use of funds via trusted payment processor
Covenants for this loan are the following:
- Chargebacks: <1% Min. Liquidity: 1.5x disbursement
- Min. Tangible Net Worth: 50% of draw
- Debt-to-Equity: 4:1
- Min. Cash Runway: 12 months
- Seniority: No debt above Clearpool
- Security: Control over transaction accounts
More details on this deal can be found here.
Learn more about Banxa
We interviewed the Banxa team for the benefit of the Clearpool community. Read the borrower profile below to learn more.
Can you tell us about Banxa and its history?
Founded in 2014, Banxa (TSX.V: BNXA; OTCQX: BNXAF) is the leading infrastructure provider for enabling embedded crypto — empowering businesses to take control of their crypto journey. Through an extensive and growing network of global and local payment solutions and regulatory licenses, Banxa helps businesses provide seamless integration of crypto and fiat for global audiences with lower fees and higher conversion rates. With 140+ global staff and headquartered in the USA, Europe, and Asia-Pacific, the Banxa team is building for a world where global commerce is run on digital assets. For further information, visit www.banxa.com.
Why does Banxa want to borrow capital right now, and what will you use the funds for?
As Banxa’s transaction volumes are growing, so too are its liquidity needs to service this growing volume. Banxa will only be using the borrowed capital for working capital purposes (i.e., settle customers’ transactions paid by credit cards).
Why is Banxa interested in borrowing from Clearpool’s protocol compared to other options?
Clearpool’s protocol provides Banxa with the capital and flexibility to support its immense growth in transaction volumes. Clearpool’s protocol provides Banxa with the needed control to adjust the parameters of the pool as needed.
What size does Banxa typically borrow and seek to borrow on Clearpool?
Banxa will start with a pool size of USD $5M and expand it in the future as the transaction volumes continue to grow.
Why should our community lend to Banxa?
The funds are used ONLY for working capital purposes (i.e., settling customers’ credit card transactions). With an average transaction size of less than AUD$1,000, the inherent risk of these transactions is extremely low, and the counterparty risk is with some of the largest credit card acquirers in the world, such as Worldpay. This is proven by our extremely low fraud/chargeback loss rate of less than 0.5%. The risk to reward is quite appealing.
What are some of the risk management strategies in place to ensure lenders’ funds are not misused?
We ensure the funds are only used for working capital purposes (i.e., settling customers’ credit card transactions). In addition, we have robust fraud and chargeback loss controls in place to minimize losses. We rely on 100s of factors to determine if a customer’s transaction is legitimate, which has led to industry-leading <0.5% fraud/chargeback loss rate.
How does Cauris monitor the Credit Vault and mitigate risk?
Cauris has direct access to several internal Banxa data sources (e.g., bank account transactions, credit card acquirers transactions, chargeback losses with each credit card acquirer, monthly financials, etc.) to monitor Banxa’s use of capital and adherence to key thresholds.
What does the future hold for your firm? Where do you see it one-three years from now?
We see Banxa’s embedded crypto infrastructure playing a key in onboarding traditional web2 firms to web3 and expanding into utility driven use cases, such as everyday payments for goods/services.
Are there any media you would like to share with our community?
Recent media releases:
How can Poolsiders’ community keep up to date with Banxa?
Website | X/Twitter | LinkedIn | YouTube | Blog
Want to Lend to Banxa?
Click here to visit their Credit Vault on the Clearpool app.
