Glossary of key terms

Participants

Auditors — Participants who vote to approve Borrowers based on on- and off-chain evaluation, a required step before they can borrow. Auditors receive GFI rewards for securing the protocol with a human eye.

Backers — Investors who supply capital to individual Borrower Pools. Backers evaluate individual deals and lend directly to specific Borrower Pools via the junior tranche (first-loss).

Borrowers — Participants who raise capital from the protocol via Borrower Pools.

Investors — Participants who supply crypto capital to the Goldfinch protocol, either as a Backer or as a Liquidity Provider.

Liquidity Providers — Investors who supply capital to Goldfinch by depositing in the Senior Pool. This Senior Pool capital is automatically allocated across Borrower Pools via the senior tranches (second-loss) according to the Leverage Model.

Members — Participants who supply capital and GFI to a Goldfinch Membership Vault to support the network's growth and security, and receive Member Rewards for their enhanced participation.

Mechanics

Borrower Pool — Investment pools for specific Borrower deals. A Borrower Pool is a smart contract that encodes a set of financing terms for a Borrower, including the interest rate and repayment schedule, proposed by the Borrower, and through which the Borrower can borrow capital and repay it by those terms.

FIDU — A token that represents a Liquidity Provider’s deposit to the Senior Pool. When a Liquidity Provider supplies to the Senior Pool, they receive an equivalent amount of FIDU. FIDU can be redeemed for USDC in the Goldfinch dapp at an exchange rate based on the net asset value of the Senior Pool, minus a 0.5% withdrawal fee, a rate which increases over time as interest payments are made back to the Senior Pool. FIDU follows the ERC20 standard.

GFI — Goldfinch’s core native token, used for governance votes, Auditor staking, Auditor vote rewards, staking on Backers, and protocol incentives. GFI follows the ERC20 standard.

Governance — Smart contract that is managed by the community DAO and has the ability to update the protocol via decentralized governance votes.

Junior Tranche — The junior (first-loss) capital segment of the Borrower Pool smart contract, funded by individual Backers.

Leverage Model — A formula by which the Senior Pool automatically determines how much capital to allocate to the senior tranche of each Borrower Pool.

Membership Vault — A vault for locking capital to help secure the growth and security of the Goldfinch network as a Member, earning a share of the protocol's fee revenue for doing so in the form of Member Rewards.

Senior Pool — An investment pool for automatically diversified yields. The Senior Pool is a smart contract that accepts capital from Liquidity Providers and automatically allocates capital to the senior tranches of Borrower Pools, according to Goldfinch's Leverage Model.

Senior Tranche — The senior (second-loss) capital segment of the Borrower Pool smart contract, funded by the Senior Pool according to the Leverage Model.

Incentives

Backer Bonus — The additional $GFI return earned uniquely by Backers, in exchange for taking on the risk of providing the protocol's junior capital as well as for their work evaluating Borrower Pool deals. The Backer Bonus is generated by the Pool's interest repayments.

Curve LP Rewards — GFI rewards for staking Curve FIDU-USDC LP tokens on the Goldfinch protocol.

Early Backer Airdrop — A GFI reward provided to Backers who contributed to a Pool before the implementation of the community governance proposals for Backer Rewards and Backer Staking Rewards mechanisms.

Investor Rewards — The additional GFI return all Investors on Goldfinch receive in exchange for their participation in the protocol. Investor Rewards are an estimated return as they are not defined by Borrowers' financing terms, but are instead dependent on tokenomics and network dynamics.

Member Rewards — Goldfinch Members receive yield enhancements via Member Rewards, which have been earmarked from the Goldfinch treasury and are distributed pro-rata based on one’s Membership Vault position.

USDC APY — The base-level USDC return an Investor receives for participating in Goldfinch, generated from Borrowers' interest payments on their loans. The USDC APY is defined in the Borrowers' financing terms when they establish Borrower Pools. For Backers, this APY is a fixed rate as defined by the Borrower Pool's terms and the Senior Pool leverage. For Liquidity Providers, this rate is estimated as the Senior Pool's USDC returns vary based on the Senior Pool's usage and balance.