Invoice financing and real-world collateralized loans
By Mark Curchin
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Amplify: DeFi protocol for invoice financing and securing collateralized loans in stablecoins
The global invoice financing market for small and medium enterprises is valued at USD 1,561.5B, with 40% of companies unable to receive financing from banks or financial institutions. Amplify saw the opportunity to help SMEs and investors seeking high ROI in the DeFi industry by providing a secure platform to lend and finance invoices. Developing the ground for Amplify was a perfect fit for the Holdex team, with a strong belief in real-world problem-solving startups and expertise in dozens of blockchain protocols. We got to sparkle the brilliance for smart contracts, website, and platform development services tailored for enterprise customers.
Holdex x Amplify
When Amplify reached out to Holdex, they had just kicked off their startup journey with undisclosed financing from Tenity and a fork of the Compound protocol. It was called Ampt Finance V1. Although Compound supported collateralized loans, borrowing in exchange for deposited $ETH at that time was only possible. Our engineering team decided to redesign and develop a new set of smart contracts. This enabled us to translate real-world invoices into NFTs (ERC-725), a process we call invoice tokenization. Private information was securely hashed on the blockchain, and public ID could be queried via IPFS. The NFT would carry information about the invoice score, due date, amount, and billable party on the blockchain.
As the invoices were tokenized, borrowers could lock them in unique borrowing pools. Once locked, the borrowers can take loans proportionally to their invoice score, preventing borrowers with low scores from profiting from the protocol.
Amplify was on for a full transparency policy, allowing lenders to view, analyze, and decide to whom they want to lend their assets. Borrower transaction history, current collaterals, and company information are available to all protocol users in the interface.
Design-wise, Amplify was a challenge too. Small and medium enterprises were unfamiliar with DeFi, and lenders were already used to specific farming terminology. Holdex gladly took this challenge to find the middle ground of complex invoice financing terminology and DeFi and transform it into a clean and intuitive interface, allowing Amplify to get their first customers onboard and helping SMEs to finance $100K+ in the first few months from their v2 launch.
An autonomous organization is a must-have element for protocols to be considered entirely decentralized. Amplify adopted the idea of going fully decentralized and rewarding users willing to contribute to the protocol's success. Holdex team was tasked to propose the best DAO voting solution. The solution was also required to be decentralized, capable of reading voter information, and preventing voting fraud from users who use the same tokens to vote from different wallet addresses.
Our engineering team came up with a hybrid between Snapshot and a custom-developed application. The Amplify DAO app would source the proposals from Snapshot and enable users to vote on them. Votes were calculated through a custom-made voting smart contract that prevents fraud and ensures a transparent voting process.