Identity Verification

In order to leverage the on-chain and off-chain KYC / KYB solutions that are available currently, Sapling will create a ‘verification hub’ which will allow the protocol to integrate with an unlimited amount of current and future KYC / KYB solutions. Over time, the Protocol Verification Hub will offer participants a choice of using a number of potential identity verification solutions, and will also act as the verification gateway into the protocol allowing any user of the protocol to interrogate which participants have or have not been verified to lend or borrow.

Initially, it is anticipated that protocol participants will have to rely on off-chain identity verification solutions as follows:

• Protocol Governance will carry out off-chain verification for any prospective First Loss Capital Providers and will not allow First Loss Capital Providers to create pools until they have successfully completed the protocol verification process.

• A Lending Pool will have the choice of whether to mandate identity verification for Lenders who supply capital into their Pool or Borrowers who they loan capital to from their Pool. If a Lending Pool chooses to mandate identity verification then they will be able to specify any off-chain process that they wish to use.

It is the intention of the protocol to ensure that an appropriate level of verification information is made transparent to support the decision-making of other protocol participants. For example:

• A First Loss Capital Provider will be able to see whether a Borrower has been verified by another First Loss Capital Provider.

• A Lender will be able to see what percentage of a First Loss Capital Provider’s portfolio of Borrowers have successfully completed a verification process.

• A Lender who has provided capital into a Pool will be able to view the uploaded verification evidence for a Borrower prior to voting to approve the relevant loan.