Protocol Components

Lending Pool

The Lending Pool is a smart contract that accepts any chosen ERC20 token (e.g. USDC or DAI) from the First Loss Capital Provider and Lenders and issues loans using that capital to Borrowers. In order to issue loans to Borrowers, the First Loss Capital Provider must first stake an amount of a capital token, for example USDC, into the Lending Pool smart contract to establish the First Loss Tranche; this tranche will act as first loss capital in the event of any Borrower default.

Sapling Pool

The Sapling Pool is a Lending Pool administered by the Protocol Governance, whose purpose is (i) to provide a diversified investment opportunity for Lenders and (ii) to provide loss cover for the lending activities to Community Banks. Protocol Governance via the Governance Board will nominate who to act as First Loss Capital Provider for the Sapling Pool. The Sapling DAO Treasury may or may not provide the first loss capital required to create the Sapling Pool, and the Pool will accept additional capital from Lenders, giving Lenders diversified exposure across many Community Banks. It is envisioned that Sapling’s initial pool to scale will be the Sapling Pool.

When depositing capital into the Sapling Pool, Lenders will receive an equivalent amount of Sapling Pool tokens. Subject to liquidity constraints Lenders can withdraw their capital at any time (whole or partial withdrawal) by redeeming their Sapling Pool tokens. Lenders into the Sapling Pool will receive an interest rate return on their capital.

Loan Desk

Loan Desk is a smart contract that facilitates the loan application process. Loan Desk contracts are owned by their respective lending pools and are administered by the First Loss Capital Providers.

Pool Token

Pool Token is a ERC20 token contract that represents lender positions into a lending pool. Pool Token contracts are owned by, and their supply is managed by their respective lending pools.

Lender Governance

Lender Governance is a smart contract, LenderVotes, that enables lender voting based on Pool Token ownership. Each pool has one Lender Votes contract. These contracts, and by extension the lenders who own Pool Tokens, have the final say before loan offers can be extended to the borrowers.

Core Access Control

Core Access Control is a smart contract that provides protocol level role management, and access control.