Democratized Prime -Understanding The Credit Profile of a Pool

This content is for informational purposes only and does not constitute financial advice.

Each Democratized Prime pool displays key metrics to help guide your lending decisions.  Here is a glossary of key metrics.

Universal (all pools)

Collateral value: The total value of the collateral pledged to this pool. Borrowers pledge certain tokens representing interests in the underlying loans, not the whole loans themselves. This is the asset base securing what borrowers owe lenders. 

Advance rate: The most a borrower can draw against the collateral they've pledged. At 90%, $100 of pledged collateral supports at most $90 of borrowing. This is a cap on borrowing rather than a measure of credit quality — risk is reflected earlier, in the haircut applied when the collateral is valued, so pools with different credit profiles can carry the same advance rate.

WA (Weighted Average): Averages are weighted by current unpaid principal balance. A handful of large balances can pull a weighted average well away from the typical loan.

Loan Count: The number of loans pledged into the pool backing the collateral. Borrowers pledge certain tokens rather than whole loans, so this counts the loans securing those tokens. A higher count means no single defaulting borrower moves the collateral significantly.

Loan size

Average Loan Amount: The average size of the underlying loans at origination.

Average loan balance (CBL): The average amount still outstanding today. This amount may run below the average loan amount because certain borrowers may have paid down principal.

Rate and pricing

WA coupon: The average interest rate the underlying borrowers pay, weighted by current unpaid principal balance. This is the cash flow the collateral generates at the current moment, and it's what supports the institutional borrower's ability to service what they've drawn from the pool. Weighted average may vary.

WA factor rate (SMB): Small business financing is priced as a multiple of the amount advanced rather than as an interest rate. For example, at a 1.33 Advance Rate, a business that receives $100,000 repays $133,000 in total. Repayment may run about 14 months; the annualized cost can be considerably higher than 33%.

Credit quality

WA Credit Score: The average FICO score of the underlying borrowers, weighted by current unpaid principal balance. Higher scores generally mean lower default risk, though the haircut applied to the collateral matters as much as the score.

WA Credit Score (SMB variant) The business owner personally guarantees repayment, so this is the owner's individual FICO rather than a business credit rating. It's the backstop if the business itself can't pay.

WA Income (HELOC) Average annual household income of the borrowers, weighted by current unpaid principal balance.

WA Debt-To-Income (post) (HELOC): the borrower's total monthly debt payments as a share of gross monthly income, measured after this HELOC was originated. 

WA Payment to income (HELOC): what this loan's monthly payment alone consumes of gross monthly income of the borrower. DTI counts every debt the borrower carries; PTI isolates this one.

WA Time In Business (years) (SMB) Average years the borrowing businesses have been operating. Failure rates fall sharply after the first few years, so an average near nine points to established operators rather than startups.

Collateral coverage

WA Combined loan-to-value "CLTV" (post) (HELOC) : all mortgage debt secured by the home, including this HELOC, divided by the home's value, measured after origination. For example, at roughly 60%, homeowners hold about 40% equity, and that equity absorbs a decline in home prices before the loan is at risk.

WA Current LTV (CBL): The loan balance divided by the current market value of the crypto securing it. Unlike home equity, this moves continuously with crypto prices. At 51%, prices would need to fall by roughly half before loans may approach liquidation.

WA Home Value (adj) (HELOC): The average value of the homes securing these loans. This is the denominator in CLTV, so how the value is adjusted determines how conservative the equity cushion figure is. (Still open — the adjustment method needs to be named in this tooltip.)

Avg. Business Collateral Pledged (SMB): The average value of business assets securing each receivable. This is a per-loan figure, distinct from "Collateral value" at the top of the panel, which is the total for the whole pool.

Position and structure

1st lien / 2nd lien / 3rd lien (HELOC). Lien position determines who gets repaid first if the home is sold or foreclosed. A 1st lien is paid before all other mortgage debt; a 3rd lien is last in line and carries the most risk of loss. These percentages show how the pool splits across positions.

Non Owner Occupied ("NOO") concentration (HELOC): The share of loans secured by rental or investment properties rather than the borrower's own residence. 

Term

WA Term (months) (Auto, HELOC, SMB) The average original length of the underlying loans, weighted by current unpaid principal balance. Longer terms mean the collateral may pay down slowly. 

WA remaining term (months) (CBL): Months left on the loans rather than their original length at origination. Crypto-backed loans run up to 12 months, so 9.4 months means the collateral is relatively newly originated.

Asset composition

WA Vehicle Age (years) (Auto): Average age of the financed vehicles. Older vehicles may recover less at repossession, so this can affect how much the security interest is actually worth.

Top 5 vehicle Manufacturers (Auto): The share of the pool by vehicle brand. Concentration matters because a brand-level event, like a recall or a collapse in resale values, would hit recovery on those loans at the same time.

BTC collateral / ETH collateral (CBL): The share of pledged crypto by asset. At 98% BTC, collateral value tracks Bitcoin almost entirely, with little diversification from the ETH portion.