Aug 25, 2022
Accessing liquidity as a Goldfinch Investor
How to withdraw capital as a Backer or Senior Pool LP on Goldfinch
It’s important for Goldfinch Investors to understand when and how to access liquidity after supplying USDC to the protocol.
There are multiple options for withdrawing capital by exiting a position or claiming interest payments, depending on whether one participates in specific Borrower Pools as a Backer or invests via Goldfinch’s Senior Pool as a Liquidity Provider.
Participating as a Senior Pool LP: FIDU Liquidity
- The Senior Pool is Goldfinch’s single diversified pool, optimized for ease.
- Senior Pool Liquidity Providers (LPs) supply USDC to the protocol’s Senior Pool, which automatically distributes capital across the network’s Borrower Pools according to the protocol’s leverage model. This mechanism ensures that the Senior Pool is diversified across many Borrowers.
- LPs can withdraw from the Senior Pool by redeeming their FIDU for USDC when there is unutilized capital in the Pool.
When LPs supply USDC to the Senior Pool they receive an equivalent amount of FIDU, a composable and interest-bearing ERC-20 token representing their deposit. The exchange rate for FIDU increases over time as interest is paid to the Senior Pool.
This means an LP can fully or partially exit a position, or claim any portion of interest repayments, simply by exchanging FIDU for USDC — as the value of FIDU grows relative to their original USDC contribution.
LPs can withdraw from the Senior Pool using the Goldfinch dapp when there is excess USDC by redeeming their FIDU for USDC at an exchange rate based on the net asset value of the Senior Pool. Withdrawals incur a 0.5% withdrawal fee contributing funding to the Goldfinch DAO treasury.
Various Goldfinch community members and third-parties have taken steps to create additional mechanisms to withdraw capital from the Senior Pool when there is no excess USDC. For example, two community members created a withdrawal mechanism with a FIDU-USDC Curve pool.*
Participating as a Backer: PoolToken NFT Liquidity
- Backers invest in specific Borrower Pools to optimize for yield and selection.
- Backers are responsible for evaluating specific Borrower Pools, and providing first-loss (junior tranche) capital to specific Borrower Pools.
- Backers may withdraw interest payments at any time as the Borrower makes them, or can access liquidity via their PoolToken NFT.
A Backer who supplies USDC to a Borrower Pool receives a PoolToken NFT representing their portion of the capital borrowed by the Borrower from that Pool. PoolToken NFTs are composable ERC-721 tokens, automatically delivered to the wallet address used to supply to the Pool. The PoolToken NFT is what the Goldfinch dapp uses to determine how much of the Borrower Pool’s overall principal and interest the Backer holding the NFT is entitled to at any point in time.
Backers may withdraw interest payments at any time as the Borrower makes them, currently monthly across Goldfinch Pools. Withdrawing one’s principal is dependent on the pool term as proposed by the Borrower, as of August 2022 three years on average across Goldfinch’s Pools. There is no withdrawal fee for claiming a Backer’s share of a Pool’s interest repayments and principal.
The Goldfinch dapp does not directly support PoolToken NFT secondary sales. However, community members and third-parties have launched various integrations to provide Backers with the ability to sell their PoolToken NFTs. For example:
- AlloyX launched a Goldfinch integration
- The Goldfinch community is launching a community-driven PoolToken NFT market that will allow backers to sell their PoolToken NFTs*
Learn more about accessing liquidity on Goldfinch in the protocol documentation. If you have questions about becoming a Goldfinch Investor, reach out to the community on Discord, or, if you prefer to speak to a live person first, please fill out this form.
Ready to get started? Follow the step-by-step Investor guide in the documentation.
* Please note that neither the FIDU-USDC Curve Pool, PoolToken NFT market, integrations, nor any other marketplace outside the Goldfinch dapp, are built and maintained by Goldfinch. Therefore, you should use your own judgment before selling FIDU or Backer PoolToken NFTs outside of the Goldfinch dapp.
