you would not lend someone money against their house and also let them tell you what the house is worth. private credit comes close: a fund values its own loans and borrows against its own number.
covenant makes a private credit note financeable for a lender who is not entitled to see the borrower’s books: the valuation moves out of the fund’s own judgement and into published code.
its holder can borrow against it rather than sell it or wait three years. the case, and the Financial Stability Board finding behind it, is in the README.
the advance rate is the percentage of the note a lender will lend against, and the haircut is the rest. it is a published function of what the borrower owes against what it earns, so a lender can recover that one ratio and none of the five figures behind it.
three parties, three views
note holder
owns a slice of the loan, and wants cash without selling it
for example a pension fund or family office holding a $1m slice
seesthe position, and the pledge that raises cash against it
cash lender
advances that cash, with no right to the borrower’s books
for example a bank’s fund-financing desk
seesthe verdict and the advance rate
never the figures behind them
agent
holds the borrower’s figures, and no longer decides the number
for example the fund’s own credit or valuation desk
seesthe figures going in, the decision coming out
what is live
the chain read did not come back: the application is not configured. missing configuration: NEXT_PUBLIC_NETWORK. copy .env.example to .env.local and restart the dev server. copy .env.example to .env.local and restart. the views above read the same live state and will say the same thing until it does.
every hash in EVIDENCE.md, signed through /transactions.