An introduction to Probity: a decentralized, autonomous, regulatory-compliant credit protocol
Probity is a regulatory-compliant autonomous financial system that allows for the extension of credit to borrowers. All loans are over-collateralized, substantially reducing the risk to investors in debt securities issued through the system. Once the debt issuers post collateral, they are eligible to obtain credit from a credit facility pool that is funded through investors on the platform via an exempt debt security offering. As borrowers approach the credit limit, which is solely determined by the size and utilization of the fund across all borrowers, the algorithmic interest rate increases. The rate function is convex so as to create low rates under periods of high liquidity and raised rates when liquidity becomes unavailable. The platform supports a variety of tunable configurations for jurisdictional compliance with lending laws, such as state statutes governing maximum lending rates.
Probity is a permissioned protocol by default, and currently only allows lending of US dollar tokens. In practice, any tokenized asset can be used as collateral by borrowers, provided that price data is accessible on the deployed network.
The contents of this section of the documentation explores how Probity works on a technical level. The smart contract code behind Probity is planned to be open-sourced upon completion of security audits and system deployment so that users can verify the integrity of the system that they're interacting with.