Professional wholesale borrowers can get leverage from Sweep.
- Borrowers use senior tranche loans to multiply their return on equity.
- Sweep partners with selected professionals in to get design, off-chain infrastructure, operating attention, high levels of transparency and reporting, and capital.
Borrowers can use Sweep tools to assemble proposals and seek funding.
Sweep has a small number of slots for money market placement. Participants should be comfortable operating both DeFi and fixed income investments.
In the simplest money market placement, a borrower might add 2% capital, and expect a 50 bip spread between the SWEEP funding rate and returns on a mandated portfolio. This would produce a 25% return on equity. The mandated strategy that meets the needs of Sweep savers is low risk and short duration.
The primary responsibilities for Sweep money market placement are:
- Handle investments and redemptions reliably and efficiently
- Monitor spreads and costs. Decide when to add to positions (when return on equity is competitive) and when to close out positions. This keeps the supply and demand of savings in balance, and removes risk for the borrower.
Sweep borrowers can manage their position with a weekly cycle. Auctions, repayment demands, and interest rate changes happen once per week.
Borrowers can propose higher volatility strategies if they add enough capital and shorten redemption periods to manage the extra risk. Those adjustments can be programmed into the margin loan.
Borrowers can build programmed DeFi strategies, and attach them to a Stabilizer to get leverage. This gives them an effect similar to lending protocols such as Gearbox, but with customized terms that match their customized strategy.
DeFi strategies fit into Sweep and many other savings protocols because they can invest and redeem in 24/7 markets. This makes it easier to keep cash invested in earning assets.
Savings protocols can bring funds from other blockchains.
Sweep can provide leverage and demand for private tokenized securities, such as tokenized treasuries.
Regulators usually require that a security token can only be purchased by a qualified buyer that is in a registry. The protocol can ensure that a borrower and potential liquidators are all fully qualified.
Tokenized security issuers can partner with protocols such as Sweep to increase sales, find compliant buyers, and add value with automated structuring.