What is Clearpool (CPOOL)? The uncollateralised lending protocol

By William Farrington

16:21, 26 May 2022

Elite DeFi platform attracts high-end borrowers enticed by unsecured lending options

The Ethereum-native Clearpool protocol is a decentralised finance (DeFi) platform with a difference. In the following article, we break down all the key components of Clearpool . What are Clearpool and the CPOOL utility token, and how does Clearpool work?

What is Clearpool (CPOOL)?

Cleapcool (CPOOL) is marketed squarely at cashed-up institutional investors seeking liquidity. There are hundreds of DeFi options to choose from, but Clearpool’s decentralised capital markets are different. Whitelisted borrowers can open uncollateralised positions, as opposed to the 150%-200% overcollateralised positions that are common in the DeFi space.

To take advantage of Cleapool’s unsecured lending, lenders must first undergo know-your-customer (KYC) and anti-money laundering (AML) checks, as well as a credit risk assessment through X-Margin.

Despite loans being unsecured, borrowers must stake 500,000 CPOOL coins (valued at $23,000 as of 26 May 09:40 BST (+1 UST)) before tapping into the liquidity pool. Once liquidity is withdrawn, interest starts to accrue.

This staking requirement differs from a collateralised position in one key way: it is less affected by market volatility, thus lenders’ positions are not prone to liquidation because of uncontrollable market forces.

Lenders are incentivised via rewards sourced from interest rate accrual. When putting up liquidity, lenders receive cpTokens, which represent the amount of liquidity supplied to a pool, thus determining the rate of interest earned.

The Clearpool team currently processes all whitelist applications, but a governance system for CPOOL holders is planned for the future.

Liquidity pools: a deeper dive

Clearpool (CPOOL) liquidity pools (LPs) are borrower-specific, meaning each pool comprises only one borrower. Once the borrower creates their specific LP, lenders can contribute to the pool via the interface. All pools are denominated in USD Coin (USDC).

Once the pool has been funded, the borrower can utilise the supplied liquidity. The utilisation rate is the percentage of funds being used against the percentage of funds being supplied. For instance, Amber Group’s pool (above) has a utilisation rate of 40.42%.

Interest rates are directly linked to utilisation rates. Since higher utilisation represents greater risk (due to greater chance of defaulting), interest rates increase, and vice versa. Borrowers cannot exceed a 95% utilisation threshold. Once this limit is reached, borrowers are required to reduce the utilisation rate. Failure to do so results in an auction wherein Clearpool users may bid on the defaulted amount.

Clearpool plans to introduce multi-borrower “thematic pools” that will provide diversification for Clearpool’s liquidity providers.

CPOOL token: key details

So, what is Clearpool coin used for? As stated above, staking CPOOL coin is a requirement for borrowers. Lenders also receive rewards in CPOOL cryptocurrency. Future plans for the CPOOL cryptocurrency include protocol-native staking and governance in regards to whitelisting new borrowers.

Clearpool (CPOOL) launched on Ethereum in October 2021 and subsequently obtained listings on KuCoin, Gate.io and AscendEX. Seed and private token rounds distributed 12.33% of the one billion supply, while 0.35% was sold in a public round. Team tokens comprise 15% of supply, subject to a 24-month vesting period. The remainder was distributed as follows:

Ecosystem: 10.15%
Partnerships: 10%
leaRewards: 20%
Liquidity: 15%
Reserves: 17.17%

As of 26 May 10:40 BST (+1 UST), Clearpool (CPOOL) had a circulating supply of just over 53 million and was changing hands at $0.046, giving a market capitalisation of $2.47m. A 24-hour trading volume of almost $900,000 was just below 36% of market cap.

Who are the Clearpool team?

Clearpool was co-founded by Robert Alcorn, now chief financial officer, Jakob Kronbichler, now chief commercial officer, and senior adviser Alession Quaglini. The team is split across Dubai, Singapore and the US. It is backed by numerous venture capital funds including Sequoia, Arrington XRP Capital and SINO Global Capital.

Who uses Clearpool?

Five institutional borrowers currently have open positions on Clearpool. The largest pool, at nearly $13m, belongs to Auros, a crypto market-maker and arbitrate trading enterprise.

The quantitative trading firm Folkvang also has a $12m-plus position on Clearpool. FBG Capital, the blockchain enterprise Amber Group and the algorithmic market maker Wintermute make up the remaining Clearpool borrowers.

FAQs

How many Clearpool coins are there?

CPOOL has a maximum supply of one billion, 53,126,455 of which are currently in circulation.

Is Clearpool secure?

Clearpool’s smart contracts were audited by Pessimistic. Some major issues were found and subsequently fixed. The full report outlines all issues. Unsecured borrowing comes with risk of default, although Clearpool’s liquidity pools are less exposed to market volatility than collateralised alternatives. Be sure to conduct further research on the project in order to understand the risks involved.

What makes Clearpool unique?

Clearpool allows whitelisted institutional borrowers to access unsecured capital without opening a collateralised position. Although 500,000 CPOOL must be staked to open a position, borrowers are not exposed to market volatility that could result in liquidation.