Valchi Protocol
The lack of efficient investment products in real-economy loans makes it tough for non-bank lenders to collect liquidity from investors. For this reason, Valchi is building a global credit marketplace.
Project Description
Valchi protocol architecture is the following: a non-bank lender lists a loan originated by himself on behalf of a borrower on the protocol and investors can invest in different ways in it. Valchi provides three different investment instruments, each designed for a particular category of customer. This allows all potential investors to participate in loans with varying risk levels and goals, boosting the volume of liquidity that converges into non-bank lenders and consequently helping them in satisfying more borrowers.
The investors can act as underwriters, liquidity providers or traders: Underwriters invest in the loans' junior tranches. Liquidity providers deposit liquidity in a pool that includes all of the platform's senior tranches. Traders invest in perpetual bonds. This asset pays monthly interest but is not redeemable and it refers to a collection of junior tranches in a pool known as the conversion pool. Perpetual bonds are created in order to generate significant transaction volumes on the platform; they can be listed in Dexes and Cexes due to their quicker price discovery and increased liquidity.
Focus on perpetual bonds: they are created by underwriters who purchase junior tranches and exchange them on the conversion pool for a specific number of perpetual bonds. After that, they sell them on the market. They operate as market makers and receive a market maker fee from Valchi in exchange.
How it's Made
I created the smart contract architecture on Polygon ZKEVM and a Figma in order to showcase the platform's functionalities. For a better user experience I implemented also a script in order to use the ERC4337 standard (account abstraction), leaning on the bundler service offered by stackup.sh. The reason why the protocol is built on Polygon ZKEVM, essentially, is to improve Ethereum's scalability. I believe that, to do this, we need both technological architecture developments (such as rollups) and applications that interface with the real world to achieve mass adoption (like Valchi). Moreover, there are big operative advantages using Polygon ZKEVM such as cheaper costs and faster transactions, resulting in capital efficiency.
