Generic Creditors

Generic Creditors

A Creditor is a (set of) smart contract(s) which accepts the value contained within Arcadia Accounts as collateral.

Naturally, each Creditor can have a set of requirements to which the logic in Arcadia Accounts must adhere to, before it “trusts” the Account to work as expected. To enforce this, a Creditor can set one or more Account versions as approved, meaning that any Account on an approved version is able to take liabilities from the Creditor. A specific Account version means the Creditor can filter Accounts on allowed collateral assets or types, on a specific manner of liquidating and more.

The owner of a Creditor must set a Risk Manager. This role is responsible for setting and maintaining the correct collateral and liquidation factors for all assets. Next to these factors, the Risk Manager also sets the exposure limits against each individual asset. In short, it protects the Creditor against market and other risks, and ensures the risk taken by the Creditor remains acceptable.

A Creditor will have a high level of control over Accounts. Namely, it must return the open liabilities of an Account, and as such determines whether the Account remains in a healthy state or not.

Any Account owner can set, for one or more Accounts they own, a beneficiary of their Account. In short, user A who controls Account 1, can tell a Creditor that user B is able to take out liabilities against the Account 1 of user A.

Every Creditor must ensure a suitable liquidation flow is foreseen in case the Account’s health status works against the Account owner. The Arcadia team already developed a robust liquidation flow which can be used by other Creditors.

A Creditor will express their liabilities in a certain numeraire. This represents the unit of accounting, for example USD, USDC or ETH.