Overview

Untangled Protocol is a decentralised funding and liquidity protocol that bridges crypto liquidity pools with green and impact financing assets. We expand the crypto collateral universe towards real world assets whilst helping solve Earth’s biggest challenge - climate change impact - through crypto’s power of coordination and capital allocation.

Untangled provides complete 'originate' to 'distribute' solutions for green assets. Collaterals, once tokenized into NFTs, can be refinanced or packaged in a seamless way, without any frictions. Investors hold note tokens which represent interests in cashflows from collateral pools. This ERC-20 is composable with the rest of DeFi. These note tokens could be used as collaterals for stable coins, particularly Celo blockchain, the "Home of Regenerative Finance". This scalable financing approach for both originators and investors for a dedicated asset class - green assets- is the key value proposition of Untangled Protocol.

Two applications have been developed on Untangled Protocol: Binkabi 'originate' assets and Untangled Finance "distribute' them. Both are market-ready. Binkabi has been used by a number of lenders in Africa. An independent security audit has also been completed for Untangled Protocol's smart contracts, making them ready for mainnet deployment. Untangled protocol code has been inspired by Centrifuge, Goldfinch and MakerDao, among others. Certain protocol contracts have been subject to AGPL license to attribute the source protocol.

Green and regenerative finance

Green assets need financing

Some crypto credit projects have started to finance real world assets. However, there are none dedicated to financing green assets. Other crypto projects focus on tokenizing carbon credits. Whilst this is an important first step to make carbon credits more accessible to investors, it does not create new credits through financing new green projects.

Meeting demand for tokenized green asset collaterals

An increasing number layer 1 blockchains, stable coins and other lending protocols want to allocate capital towards green and impact assets. Currently, there are no transparent and easy ways to do so at scale. This is because of limitations on both supply side (availability of green and impact crypto collaterals) and demand side (how can decentralised crypto project onboard real world assets).

Avoid greenwashing

Where real world assets are financed there often lack an on-chain credit disbursement and tracking. These are essential for transparency and investor protection but crucial when the asset involved is purported to be ‘green’. In other words, how to avoid greenwashing?

Climate change is a coordination problem and a capital allocation problem

The global nature of climate change demands global coordination and an efficient capital allocation channel. Averting climate change impact also requires a wide participation of actors: asset backers, liquidity providers, certifiers, auditors who are incentivized around a common, unifying goal.

Trade finance supporting emerging markets

Extend DeFi lending collateral universe towards real world assets

The current crypto lending is mostly collateralised by native crypto assets. This excludes a vast majority of borrowers and projects from accessing crypto credit, particularly those financing real world assets such as renewable energy projects and trade finance.

With banks exiting the market, many SMEs are struggling to obtain finance. There is a $1.7 trillion funding gap in trade and supply chain alone, 15% increase from pre-pandemic level. Fundraise through securitisation is complex and expensive with multiple service providers involved. The lack of transparency also adds a risk premium for originators. Alternative lenders and fintechs, typically with under $30m portfolios, find it difficult to access capital markets.

On the supply side, value locked in defi has been limited to crypto. In order to grow, diversify and be regulatory proof, Defi needs to tap into the multi- trillion dollar real world assets where businesses such as SMEs in global trade have a real need for capital.