Credit Structured Products
One such Real World Asset are Credit Structured Products. Credix Finance is perhaps the leader in this area today, and as such they will be UXD's first partner for Real World Credit Structured Products
What is a Credit Structured Product?
Credit structured products are financial instruments that are created by combining various types of debt securities, such as bonds, loans, or other types of credit instruments. These products are designed to provide the ability to access a diverse range of credit exposures as well as risk profiles.
Risk Tranching
In the context of credit structured products, "tranching" refers to the process of dividing a pool of assets, such as bonds or loans, into different classes or "tranches," based on the level of risk and expected return.
For example, in a collateralized debt obligation (CDO), the pool of assets is divided into several tranches, each with a different level of risk and expected return. The highest-risk, highest-return tranche is typically called the "equity" tranche, while the lower-risk, lower-return tranches are called the "senior" tranches. The tranches are structured so that the losses on the underlying assets are absorbed by the equity tranche first, before the losses affect the senior tranches.
Credix
Credix is one such implementation of a Credit Structured Product, providing capital to underserved markets (such as South America) in an efficient manner.
Specifically, Credix's first market, "The Credix FinTech Market" focuses on providing credit to LatAm FinTech lenders selected for their quality and high-growth potential. All borrowers have passed a robust, multi-tiered diligence process, with yield backed and generated by real world assets.
UXD Protocol will begin its partnership with Credix by supplying liquidity into this Credix FinTech Market, and may evolve its partnership with Credix over time.
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