In this Gitbook section, we delve into the crucial components of Risk Management, which encompasses collateral management and credit evaluation.
The smart contract mandates borrowers to deposit collateral before the loan is disbursed. It holds the collateral and releases it upon successful loan repayment or liquidates it in case of default.
The platform employs data analytics and blockchain data to assign risk scores to borrowers. This process is facilitated through an on-chain oracle that calculates risk scores based on factors such as:
- Repayment history
- Collateral value
- Overall credit history