Circle Launches Open-Source Protocol for Credit Markets on Public Networks
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Circle has launched its research arm to drive technical innovation in crypto, blockchain and Web3.
Circle Research has introduced its first contribution, the Perimeter Protocol, a new standard for online credit markets.
Circle today introduced Perimeter Protocol, an open-source protocol designed to streamline credit transactions on the internet. It has also announced the launch of its research arm, Circle Research.
Perimeter Protocol is the first contribution by Circle Research. According to the company, the protocol consists of a set of smart contracts built on open standards, facilitating secure and transparent capital exchanges on public networks.
The company said that its USDC and EURC stablecoins have found utility across various user groups, including developers, corporations, and end-users, particularly within the expanding DeFi lending markets.
However, newcomers seeking entry into these markets face a challenge in the secure unlocking of credit on the blockchain through robust standards and underwriting.
To address this challenge, Circle has released the Perimeter white paper and a public Github repository, with an aim to address the task of integrating real-world assets and un- or under-collateralized loans into a protocol offered as a public utility.
Circle notes that a key feature of Perimeter Protocol is its adaptability, as it can accommodate a wide range of credit use cases.
These span from invoice factoring for small and medium-sized enterprises to institutional crypto credit for trading opportunities, global payroll advances, and instant settlement capabilities within merchant processing.
Circle’s Perimeter Protocol offers a solution for online credit transactions on public networks with a focus on practicality. It aims to simplify credit processes for organizations by standardizing underwriting and permissioning,
The whitepaper states that the protocol offers flexibility to Pool Admins, those responsible for underwriting risk and managing pools, allowing them to adjust fee structures and pool parameters as necessary. Moreover, the protocol introduces predictability and transparency for lenders, ensuring a secure lending process.
Circle claims that the protocol operates without fees and does not require a native token. This means that builders and developers can build on a shared public infrastructure to enhance existing markets.
These include venture debt, trade finance for multinational corporations, revenue-based financing for companies with on-chain records, stablecoin instant settlement to reduce friction in fiat payment systems, syndicated loan markets across industries, and emerging markets fintech capital for both consumers and SMBs.
“Defi protocols have pioneered how open networks using stablecoins bring value and financial inclusion to anyone with a wallet and internet connection,” Rachel Mayer, Circle’s VP of Product, said in a statement. “Transparent flow of funds and smart contracts enacting ‘code is law’ bring improved efficiency, automation, speed and scale relative to traditional financial markets due to programmable infrastructure and digital asset 24/7 rails.”
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