CR Square Finance - Invoice Finance DEFI Platform, which would act as a catalyst for the version in our vision to the adoption of Web3 or blockchain-based applications for small and medium business users across the world.
Features of Invoice Finance DEFI Platform
1. Raise invoices and receive payments - Raising Secure Invoices' on Blockchain and offer your customers' pay in Crypto and Fiat. Take your business beyond borders. Transact in multiple currencies with the option to add more.
2. Access to Invoice Finance on your invoices (Collateralized and Uncollateralized)
3. Lend stable coins earn APY in stable coins up to 60%
4. DAO approved uncollateralized loans
5. Access to Comprehensive Dashboard - Customizable Dashboard that suit’s your business and organization needs, Know your KPI performance on a single screen.
6. Easier Access Working capital through decentralized finance model across networks through rates determined by the DAO.
7. Raise Invoice of your choice for free - Create and Send Customized Invoices that echo your Brand
Invoice Financing is a typical financial business where it is governed by legacy banking systems. The banks typically accept deposits from the public at lower interest rates and lend them to businesses for a considerably higher rate. The balance is profits for the banker for the risk it is taking.
With the advent of decentralized finance on the top of the blockchain framework where the entire banking process is run in a decentralized and autonomous manner based on smart contracts, the benefits of risk-taking are reaching every investor directly without any pilferage.
For the lender(one who is financing the invoice) the benefits of decentralization and blockchain adoption are as follows:
(i) an immutable and time-stamped record of the existence of every invoice emitted by a borrower.
(ii) an immutable and time-stamped record of the debtor's confirmation, and
(iii) the confirmation and verification of the invoice (against which a lender would fund)
(iv) Automation through smart contracts, which ensures the lender's funds are secure in the event of failure of payment of the invoice by the client/customer.
Hence, the overall invoice financing process will be enhanced. Indeed, the trust and security mechanisms of the blockchain allow for the elimination of on-site audits of receivables and debtors, receivables' notification and debtors' verification, and of month-end reconciliation processes.
Moreover, the adoption of blockchain will also allow for a fast and cheaper value transfer, in particular for cross-border payments.
Challenges
1. Adoption
The Challenge of adoption of new technology based on web3 architecture by small and medium businesses is perceived to be the main challenge, traditionally these businesses pay subscription charges to use accounting software for raising their invoices and Further services like payment gateways, which charge a commission on the transferred amount. A decentralized web3 application like CR Square is going to make this free for use for the business owners in addition to providing incentives in form of CR2 tokens as a reward for every transaction they conduct on the CR Square Finance platform, in addition to access to Invoice Finance would be lucrative for the small and medium business owners to shift to Web3 Invoicing Application instead of web2 applications.
2. Competition
Competitors in this field include Request Network, which is working in the field of Invoices and Payments using crypto and blockchain, however, they have not included Invoice Finance DEFI as a part of their platform.
Other Competitors like Credefi, Polytrade Finance and Trustless capital are in the space of Invoice Finance, but carry the off-chain risk, as their business model is planned to collect capital from the Crypto world and lend to Small and Business Owners off the chain, which will carry the same risks of traditional finance such as cost of compliance, Human Bias and Non Payment of Loans, which can lead to loss of capital of liquidity providers.
CR Square Finance's business model is completely on-chain, without any human intervention based on the complete utilization of the capability of smart contracts. Which we think will attract liquidity providers to our platform and help us challenge the competition.
Risks
1. Security of Liquidity & Collateral Pools
The spectacular growth of decentralized finance (DeFi) continues to bring boundless opportunities and financial perils to crypto users. We’ve witnessed hundreds of millions of funds being lost from hacks, theft, rug pulls, and system failure ever since the disruptive crypto subsector exploded in popularity last year. About $3.1 billion worth of assets were looted from DeFi platforms until date while they caught the attention and imagination of the crypto sector according to defiyield rekt database.
Some of the major security threats in DEFI space and how do we plan to manage them:
1. Flash Loan Attacks – No Flash Loans in Invoice Finance DEFI, the business model of Invoice Finance doesn’t provide the opportunity for Flash Loans.
2. Oracle Manipulation - Oracle manipulation is another huge concern as decentralized networks have no way of accessing data without oracles. The fact of the matter is that getting accurate price data that is secure and reliable is difficult. And oracles are even more essential to DeFi than flash loans, which means we can’t get rid of them either.
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Smart Contract Bugs – Always a potential risk, even in case of multiple audits being conducted some platforms have lost funds for unidentified smart contract bug
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Risk of Government Regulation
Governments would want to regulate Crypto and DEFI space, which is overall good for the market, however, DEFI works with no borders and acts as a parallel finance system, which involves players from across the nations of the world. Hence, the risk of multiple regulations on DEFI Dapps could be a potential threat to the efficient functioning of the platform.
Individual protocols with known developers, or those controlled by corporate token holders, might be pressured to get changes pushed to the protocol. And for protocols that are as decentralized as they claim — run by distributed anonymous communities — regulators could make interaction with the protocol illegal. Or, more likely perhaps, stymie the flow of funds by targeting on-ramps or marking certain protocols as toxic.