Carapace connects buyers and sellers of protection against default risk for under-collateralized loans in DeFi. Protection buyers are lenders of under-collateralized lending protocols like Goldfinch. They can buy protection against borrower default by paying a premium into Carapace’s Protection Pool. Protection sellers sell protection risk to earn premiums. They lock in capital within the protection pool and take on exposure to cover default risk in a basket of underlying lending pools on protocols like Goldfinch.
Under-collateralized lending in DeFi unlocks multiple use-cases in helping fund both crypto as well as real world assets. For DeFi lending to become a huge market, several primitives will need to be built. At Carapace, we are building one such core DeFi primitive to make the industry more mature, more capital efficient, and to increase access amongst a diversified range of investors.