19July 2022coverage to the users, and enabling them to leverage API plug-in effects. After the users upload the asset portfolio data via the API into the DSP, the platform enables the user to easily execute data scrubbing and validation processes and to structure the transaction parameters, such as T&Cs, covenants, triggers, and the like. Cadeia's platform allows issuers, investors, and stakeholders to collaborate throughout the process effortlessly and to agree on the transaction parameters by executing a digital handshake. This is followed by the creation of transaction-specific smart contracts through the SCE for product issuance and distribution. Businesses can automate rule-based distributions of cash flows, improving transparency, reliability, efficiency, and execution speed of the overall processes. In addition to this, the platform also offers reporting, compliance, and analytical tools to investors and issuers, who can exchange information in real-time and automatically generate audit trails. As a user-friendly platform, the solution doesn't require users to have in-depth knowledge of blockchain technology or coding skills. In general, Cadeia's platform supports payments in fiat currencies as well as stablecoins, and is capable of automatically executing transactions covering traditional as well as tokenized assets and instruments.At the end of 2021, Cadeia executed the first fully blockchain-based CLO transaction, named "GreyPeak 2021-01," where it securitized a traditional corporate loan portfolio originated by a European private bank. The transaction comprised three tokenized securities tranches ­ a senior, mezzanine, and junior tranche ­ which were issued and transferred automatically into investor wallets in return for the subscription price through the smart contracts (delivery-vs-payment). Further related processes ­ securities transfer as well as cash flow distribution, including interest and amortization payments ­ were also managed through smart contracts. Since the transaction was settled in fiat currency, the set of smart contracts included a PSD2 trigger solution, which was accessing traditional banking interfaces to direct SWIFT payments. Cadeia, currently post-seed, is aiming at conducting a "Pre-Series A" fundraiser in the third quarter of 2022 to finance its European rollout and technical platform development. Next to adding further blockchains to the SCE and a reporting engine, the company is also developing value-added functions. These include valuation tools, which will be built around transaction cash-flow and portfolio scenario modelling, relative value transaction comparisons, and machine-learning credit scoring models. Relative value functions will compare the performance of different transactions and allow investors to make more educated decisions, while machine learning models will empower market participants to rescore asset risks across a certain period. In terms of expansion, Cadeia also aims to step beyond European borders and to establish a foothold in America and Asia in the future. As Steffens concludes, "We are open for business to anybody who has a requirement for a structured credit transaction, asset securitization or bond financing." Transaction Details "Grey-Peak 2021-1" True end-to-end securitisation of a corporate loan portfolio originated by a European bank, including: · Digital portfolio structuring with 3 securities tranches (equity, junior, senior) · Issuance of digital securities on Ethereum, private placement and settlement with investors (DvP) · Automated and rule-based cash flow distribution through smart contracts according to covenant tests and waterfall structures in CHF, using a PSD2 trigger solution Investors Borrowers Loan Interest & Principal Portfolio & Transaction Data Smart Contracts Reports & Deal Data Cash Flow Distribution Purchase Price vs. Securities (DvP) Structuring Deal Results · 50% reduction in total costs compared to a traditional execution · 70% reduction in back-office work for Bank Frick · 90% reduction in deal reconciliation work · T+0 Settlement instead of T+2 · Disintermediation of issuing, paying and calculation agent 2 Bank We bring a substantial paradigm shift in the way structured credit transactions and securitization can be agreed upon, executed, documented, reviewed, and audited
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