Casten Protocol

Asset Finance Flow

Indicative flow and interactions
The general flow of financing typically looks as follows:
  1. 1.
    The Asset Manager sets up a legal entity - a special purpose vehicle - for each pool. The SPV keeps all financings remote and separate from the Borrower.
  2. 2.
    The Borrower wishes to finance an asset such as an invoice or a property.
  3. 3.
    The Asset Manager originates this RWA. It then verifies the RWA and mints an NFT for the asset to be used as collateral on-chain.
  4. 4.
    The Borrower enters into a financing agreement with the SPV and asks the Asset Originator to lock its NFT in the pool tied to the SPV. As the NFT is locked, stable coin is drawn from the pool reserve, and either directly transferred to the Borrower's wallet or the SPV's wallet, which exchanges stable coin for USD and does a bank transfer to the Borrower’s bank account. The SPV is set up in order to keep all financings remote and separate from the Originator/borrower. Bankruptcy does not impact the SPV and therefore does not impact the financing. All financing transactions and payments are done directly between Borrowers, the SPV, and Investors and happen on-chain. The SPV is a pass-through entity without the aim to generate profits. It has no employees. Its sole purpose is to finance specific RWAs as underlying assets of one specific pool. The SPV administers this pool and all its services are performed by third parties, upon instruction by the SPV, for a service fee.
  5. 5.
    The Borrower pays back the financing amount plus the financing fee at the maturity date of the NFT. This happens directly on-chain. The full repayment of the NFT unlocks the NFT, which is then returned to the Asset Originator where it can be burned.