The Safi Protocol is built upon a decentralized lending model, which consists of three key components: the Senior Pool, the Junior Pool, and the Guarantor role.
Senior Pool: Liquidity providers supply the capital to the Senior Pool to earn yields optimized for ease and diversification. The Senior Pool allocates capital across the senior tranches (second-loss) of Borrower Pools based on the risk and return profiles of each project.
Junior Pool: Primarily funded by Saccos (Savings and Credit Cooperatives), the Junior Pool provides capital to the junior tranches (first-loss) of Borrower Pools, carrying a higher level of risk but also offering the potential for higher returns.
Guarantor Role: The installer/developer, who has primary access to the solar assets, serves as the guarantor in this structure. They offer a guarantee on the repayment of loans, providing an additional layer of security for both Senior and Junior Pools.
Safi also engages Impact investors as guarantors where they cover a portion of senior debt and provide an additional layer of cushion against debt loss.
Safi Protocol employs a decentralized governance model, allowing the community to actively participate in the decision-making process regarding platform development, updates, and improvements. By holding Safi tokens, users can submit proposals and vote on various aspects of the protocol, ensuring a transparent and inclusive ecosystem.
The Safi token is an integral part of the Safi Protocol ecosystem, serving multiple purposes:
Governance: Safi token holders can participate in the governance process by submitting proposals and voting on various aspects of the platform.
Incentives: Safi tokens can be used to incentivize borrowers and liquidity providers, enhancing participation and growth within the ecosystem.
Staking: Users can stake their Safi tokens to earn additional rewards, encouraging long-term commitment and alignment with the platform's goals.