Updated Token Utility

Published in

SmartCredit.io & ChainAware.ai

6 min readOct 22, 2021

We are happy to announce our updated token utility and rewards program. We will activate it with the upcoming Release 1.2.

Token Utility

SMARTCREDIT utility is defined as follows:

SMARTCREDIT as collateral for borrowing
SMARTCREDIT for staking
SMARTCREDIT for improving the borrower’s credit score

Here is a short video explanation:

Updated token utility

Rewards Program

SmartCredit.io will offer the following rewards:

Staking rewards for the holders

15% annualized inflation
225,000 tokens annually for staking rewards
4,327 tokens weekly for staking rewards

Bonus rewards for the borrowers and lenders

10% annualized inflation
150,000 tokens annually for bonus rewards
2,885 tokens weekly for bonus rewards

Affiliates/Marketing rewards

6% annualized inflation
90,000 tokens annually

Benefits for the Stakers

4,327 tokens weekly will be distributed to the stakers.

Staking is implemented via the SMARTCREDIT Fixed Income Funds (from Release 1.2):

Choose “Stake” in the left-hand menu
Deposit SMARTCREDIT into your staking contract
Only the funds deposited 90 days or more are entitled to the staking rewards
The un-staking period is 5 days — you can withdraw after the un-staking period. However, if you do this in less than 90 days, then you will lose your staking rewards

Return for the Stakers

In the following scenario — assuming 50% of holders will stake — the return for the stakers will be ca 46% annualized. Of course, this return is higher if fewer holders stake their tokens. And vice versa.

This scenario will result in a significant reduction of the SMARTCREDIT token supply.

Benefits for the Borrowers

Borrowers who stake SMARTCREDIT tokens get staking rewards, as mentioned above.
Borrowers can use SMARTCREDIT tokens as collateral for borrowing. In this case, we improve the borrower’s credit score by 1 point (on the 1 to 9 scale, 9 being the best).
Borrowers can additionally improve their credit scores via staking of SMARTCREDIT tokens.
If staking at least 15% of total loan volume, then the credit score is improved by 1 point (on the 1 to 9 scale, 9 being the best).
If staking at least 33% of total loan volume, then the credit score is improved by 2 points (on the 1 to 9 scale, 9 being the best).

A better credit score means less interest payments and better collateral requirements, meaning a higher borrowing capability.

Borrowers will receive bonus rewards — the platform will reward borrowers with SMARTCREDIT tokens for their borrowing volume.
Borrowers and lenders together will be allocated 2,885 tokens weekly in bonus rewards.
Borrowers will receive the bonus rewards after they pay the loan principal plus interest.
If the Borrower gets liquidated in the meantime, he is still entitled to the bonus rewards.
If there is less borrow volume than lender deposits on SmartCredit.io, then borrowers will receive relatively more rewards (See “Automated Rebalancing of Bonus Rewards”).
The bonus rewards APY is capped — the idea is to give good APY returns not only to the first borrowers but to later borrowers too (See “Caps on Bonus Rewards”)

Benefits for the Lenders

Lenders who stake SMARTCREDIT tokens get staking rewards, as mentioned above.
The lenders will receive bonus rewards — the platform will reward lenders with SMARTCREDIT tokens for their lending volume as long as the loan term is above 10 days.
Borrowers and lenders together will be allocated 2,885 tokens weekly in bonus rewards.
Lenders will receive bonus rewards weekly.
If there are fewer lending deposits than borrow volume on SmartCredit.io, then lenders will receive relatively more rewards (See “Automated Rebalancing of Bonus Rewards”).
The APY of the rewards is capped — the idea is to give good APY returns not only to the first lenders but to later lenders too (See “Caps on Bonus Rewards”).

Automated Rebalancing of Bonus Rewards

If the platform has too many lenders, splitting the rewards between the borrowers and lenders by a 50:50 ratio is not fair. The same applies if there are too many borrowers and too few lenders.

Therefore, we introduce weekly automated rebalancing of the rewards by the following formulas:

Borrowers Reward = Weekly Rewards x BR / (BR + LR)

Lenders Reward = Weekly Rewards x LR / (BR + LR)

Where:

BR = (Lending Volume x 0.7) / Borrower Volume

LR = Borrower Volume / (Lending Volume x 0.7)

The result of these formulas is the following: If the borrowing volume is too low relative to the lending volume, the borrowers will earn relatively more SMARTCREDIT. And vice versa.

The system will recalculate the lending-to-borrower ratio every Sunday at 12:00 a.m. UTC.

The lending-to-borrower ratio and the weekly bonus rewards allocations for the borrowers and lenders are available in the https://app.smartcredit.io dashboard. Some weeks, borrowers will receive more rewards; other weeks, lenders will receive more rewards.

Caps on Bonus Rewards

We intend to reward both early borrowers/lenders on the platform and the later borrowers/lenders. That’s why we implement a cap on weekly bonus rewards for the borrowers/lenders based on the total borrow volume in USD.

Whenever the APY is more than the max cap, then the rewards are carried into the following week (epoch). Here is the cap table:

As mentioned, we allocate 2,885 tokens every week for bonus rewards.

If APY is > 50%, based on the weekly average price of SMARTCREDIT, then APY is capped at 50%. The system will then allocate the unused bonus rewards to be pushed into the following week. If not all bonus tokens are used in the following week, these tokens are pushed again into the week after that.

The system will recalculate the lending-to-borrower ratio every Sunday at 12:00 a.m. UTC.

Benefits for the Affiliates

Affiliates can place on their website

the referral links or
SmartCredit.io widgets/plugins

SmartCredit.io offers

borrowing
lending
loan calculator plugins

The plugins are available in:

JavaScript format (integration with 8 lines of code)
WordPress’s plugins (integration with 1 line of code)

See more in https://smartcredit.io/partners

Benefits for affiliates are:

Affiliates earn SMARTCREDIT when referred users are doing their first loan.
Affiliates earn 50% of loan origination fees. The affiliates will earn these fees forever.

Affiliates can claim the allocated rewards via “Profile ⇒ Rewards.”

Claiming of the Rewards

Any stakeholder (borrower, lender, holder, affiliate) can claim their rewards via the “Profile ⇒ Rewards” section.

Glossary

Weekly staking rewards are allocated to the stakers. Stakers can claim them after 90 days of staking.
Weekly bonus rewards are rebalanced every week, depending on borrow/lend volume on the platform. The bonus rewards are capped. The cap depends on the total borrow volume.
Allocated tokens are allocated personally to you. You can claim them as a staker by staking for more than 90 days or as a borrower after paying back the loan or as a lender every week.
Accumulated tokens are the difference between weekly bonus tokens and allocated rewards. Accumulated tokens will be allocated in later epochs. If these tokens are not used in the next period, they will accumulate until they are paid out.

Dashboard

The app.smartcredit.io dashboard will contain the following info:

Borrower/Lender ratio
Total bonus rewards allocated in the current week to borrowers
Total bonus rewards allocated in the current week to lenders
Total borrow volume
Total lender deposit volume
TVL on platform
The cap table — the current bonus rewards cap
Amount of accumulated tokens

This data will be updated every Sunday, 12:00 a.m. UTC.

Your bonus rewards and staking rewards are also allocated every Sunday, 12:00 a.m. UTC.

Additional Information

Follow us on Social Media

Telegram: https://t.me/SmartCredit_Community
Twitter: https://twitter.com/smartcredit_io