The life of a loan, from the first sentence to the final payment.
Every loan on Backstop passes through five stages, and at each one the rules live in an on-chain program rather than a policy. Here is what happens, who acts, and where the money sits while it waits.
A borrower writes down what they need, and why.
The amount, the annual rate, the number of months, and the case for the loan in their own words. The borrower sets the rate. If it is too low for the risk, the pool will be slow to fill, and the market says so long before any money moves.
It is verified before anyone sees it.
Identity, income and trading history are checked against documents and bank records. What reaches the chain is an attestation, a simple yes, never the documents themselves.
The request then receives a grade from A to C. The grade reflects only what was proven, and lenders can read every item that was checked.
Lenders gather, ten dollars at a time or ten thousand.
Each pledge moves into the request’s escrow account and stays there. No person can withdraw it, including the people who wrote the program. If the pool is not full by its deadline, every pledge is returned to the wallet it came from, with nothing deducted.
The moment the pool is full, the loan is made.
In a single transaction the program pays the borrower 98 percent of the amount, sends 1.25 percent to the Backstop Reserve and 0.75 percent to the protocol. The split is fixed in code, and no one can redirect it on the way.
Repayments come home, divided to the cent.
Each month the borrower pays into the program, and every lender is credited their share the moment the payment lands: principal and interest together, at exactly the rate on the listing.
If a month is missed, the Reserve pays lenders the principal they were due while the borrower is pursued under the loan agreement they signed.
Who gets paid, worked out to the cent.
Move the terms and follow each dollar. Lenders receive every cent of interest at the posted rate. The borrower pays a single two percent fee when the loan is released, and that is the only money Backstop ever touches.
Every repayment, all together
The borrower
You, as a lender
Backstop, once, at release
Why build credit this way at all.
Banks lend most easily to those who need it least.
A business with steady sales and nothing to mortgage is often told to come back next year. An individual with a sound plan and a thin file is told the same thing more politely.
Here the request is judged by the people who might fund it, on the evidence the borrower brings, and the terms are the borrower’s to propose.
Yield should come from somewhere you can name.
Too much of what passes for return on-chain is paid from the next depositor’s pocket, or in a token minted for the purpose.
Interest on Backstop comes from a bakery’s second oven, a trailer on the El Paso to Denver run, a nurse’s first year on the ward. You choose which, and you can spread a hundred dollars across ten of them.
A ledger nobody can quietly edit.
A loan written to a public chain cannot be restructured in a back office, its payments cannot be misreported, and its history follows it.
Every pledge, every release and every repayment is a transaction anyone can verify, long after the last instalment has been paid.
What protects a lender, and what does not.
Lending to people is lending to people. These are the measures that stand between a lender and a loss, set out plainly, with the parts still under audit marked as such.
All or nothing
A loan is released only when its pool is full. A half-funded request never becomes a half-funded business with a full-sized problem.
Escrow without a key Pending audit
Pledges wait in a program-owned account that no person can withdraw from. The only exits are release to the borrower or return to the lender.
Verified, then graded
Every borrower passes identity and income checks before listing, and the grade reflects only what was proven. Every check is listed on the request.
The Reserve Pending audit
1.25 percent of every loan, held on-chain, covering missed principal in order of claim for as long as its balance allows.
Recovery
Missed payments are pursued under the loan agreement each borrower signs. Anything recovered goes first to lenders, then to refill the Reserve.
Small shares, by design
Shares begin at ten dollars, so a modest sum can rest on many borrowers rather than one.
None of this removes risk. Borrowers can default, the Reserve can run dry, and a program can hold a flaw that an audit does not find. Lend what you could afford to lose, and spread it.
Questions, answered.
What currency are loans made in?
USDC, the dollar-backed stablecoin, settled on Solana, where a transfer confirms in seconds and costs a fraction of a cent. Lenders pledge USDC and are repaid in USDC. Borrowers receive it and repay it.
Who sets the interest rate?
The borrower. A request priced too low for its risk tends not to fill, and the borrower can withdraw it and post again at a different rate. The grade gives both sides a common reference.
What happens if a request does not fill?
When its deadline passes, every pledge is returned in full to the wallet that made it. Nobody pays a fee, on either side.
Can I sell my share before the loan ends?
Not at launch. Each share will be a transferable token, and a market for them will follow once there is enough repayment history to price them fairly.
What does Backstop earn?
0.75 percent of each funded loan, paid by the borrower when the loan is released. Lenders pay nothing, and nothing is taken from the interest they receive.
Why connect a wallet while lending is closed?
So you can read the market as a lender will: your address and your USDC balance beside every request. No transaction can be requested of your wallet until the programs clear audit and the report is published.
Who can borrow?
Businesses and individuals who pass identity and income verification in a supported jurisdiction. The list of jurisdictions will be published alongside the audit report.
Ready to ask?
Draft your request now and see exactly what it will cost and what you will receive. It stays with you until applications open.
Draft a requestReady to read?
Thirteen requests are waiting, each written by the person who will repay it.
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