Recap of Silta’s 2022 and next steps

Launch of the Silta Impact Marketplace, signing commercial contracts with borrowers, scoring and due diligence in progress, and more. This is a summary of where Silta stands after the year 2022.

Ben Sheppard
Silta Finance

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What a year it’s been. The dramatic events in the crypto space took everyone on a rollercoaster ride. At Silta, we’ve been steadily building and whilst the market hasn’t made things easy, we can happily say that we’re on track and continue taking steps forward on our roadmap to bring our solution to market. I would like to take this opportunity to share some of the successes that we reached this year.

Launch of the Silta Impact Marketplace

Firstly, we launched the first version of our Silta Impact Marketplace dApp! You can view it via our website at silta.finance. The responsive version of the dApp is still being built, so in the meantime you can browse the Marketplace on your desktop. This version includes a project list of sustainability projects already pre-qualified by Silta, and a borrower portal where borrowers can register, manage and submit loan applications. We wrote another blog explaining these features in more detail, which you can read here.

Commercial contracts with borrowers

I’m happy to share the tremendous news that Silta has started to agree commercial contracts with several borrowers aiming to build renewable energy projects in South America.

Silta charges transaction advisory fees at various stages of the borrowers project lifecycle from due diligence, financial close and loan administration. The fees are intended to be used in several ways:

  • Pay for services performed by our community of transaction advisors undertaking due diligence
  • Token rewards through our delegates model and staking pools
  • Finance new activities and developments on the Silta protocol
  • To cover protocol costs

Demonstrating that the Silta business model operates on robust fundamentals is a critical activity on our roadmap. Through this revenue generation, we intend to operate a sustainable treasury and utilise the Silta token more effectively during different market conditions.

Silta Scoring

Our Silta Score has progressed significantly. We are now beginning to test the feasibility of three versions of our DD methodology:

  • Self assessment and verification: This version provides the lowest level of diligence on projects at minimal cost to the borrower. This lower-effort DD is suited to loan deals ranging from 0 to 5M USD. Rather than deep-diving into a Borrower’s project, it focuses on Red Flag issues that could cause a project to default. The DD report tells a “warts-and-all story” so investors can see the risk but highlights the impact of these projects.
  • Silta Score Micro: This version has been designed with foundations, family offices and retail in mind. It is well suited to deals ranging from 5M — 50M USD. In terms of the level of DD, it is a lighter version of “Silta Score Institutional”. In this analysis, we produce a DD report complemented by an “Exceptions report” detailing anything not included in the DD analysis. It’s a faster and less costly DD process, making it better suited to smaller-size infrastructure deals.
  • Silta Score Institutional: Provides the deepest level of diligence and is more akin to the type of analysis S&P, Moodys and others typically undertake on borrowers’ projects. It has been designed for pension funds, investment banks, and insurance companies and is well suited to deals from 50M USD upwards. In this analysis, we utilise all 280 data points in the Silta Score tool to deliver an investment-grade DD report for institutions.

Due diligence on solar projects

Silta’s due diligence is in full swing on the first three solar projects. These three projects are a fantastic start to testing our three types of Silta Scoring due diligence methodology. Once due diligence has been completed, we aim to fund these projects via OTC deals, assuming their Silta Score is acceptable to the financier.

75k USD Rooftop Solar project in Brazil with COSOL Condominio Solar Ltda
This is a pilot photovoltaic power plant with 75 kW of installed capacity in Minas Gerais state, Brazil. The 75 kW photovoltaic power generation facility would have an estimated greenhouse gas emission reduction of 50 tonnes of CO2 equivalent / year, and would generate an estimated 690 MWh green electricity / year. In terms of particulate matter emission reductions compared to a gas turbine plant, it would reduce by an estimated 7800 PM/year.

14M USD Solar Micro Grid project in Palawan, Philippines by Archipelago Renewables Corporation
This project comprises a package of 16 mini-grids powered by solar PV energy (with battery storage and hybridized with diesel generators), power distribution, and billing and collection infrastructure in Palawan, Philippines. The 16 hybrid mini-grids will span 14 barangays in 7 municipalities. 7,100 households with approximately 30,000 people and 300+ small local businesses will be fully connected and energized by the project.

100M USD portfolio of Solar projects in Colombia and Brazil
Details about this project will be announced soon on the Silta Impact Marketplace!

Tokenomics

The team has constantly been refining the Silta tokenomics. The Silta token is of paramount importance if we are to scale, as it allows us to access a global pool of transaction advisors qualified for performing due diligence. After the Silta token has been launched, anybody wishing to use the protocol must first stake the token. This applies to borrowers, financing partners, Due Diligence Advisors, Silta Scoring Committee and Project Monitoring Officers.

The Due Diligence Advisors, Silta Scoring Committee, and Project Monitoring Officers double up as “delegates”, allowing retail to participate indirectly in work and receive rewards.

At scale, we aim to finance a third of what IFC currently invests in infrastructure deals per annum. That’s approximately 12 billion USD. Each SS-Micro and SS-Institutional deal would have 5 DD officers, a Silta Scoring Committee composed of 4 people and a Project Monitoring Officer — meaning there will be a significant pipeline of work for our community to get involved with!

Next steps

The current market conditions have brought rise to the need for Silta to re-evaluate its strategy. DeFi protocols are all struggling to fill loan pools. Many share the same story: liquidity providers are leaving, and those that remain want very short loan tenors of 3–6 months and double-digit interest rates. Furthermore, they have defaults happening left, right and centre because little or no due diligence was undertaken on borrowers.

With DeFi in a pickle during this crypto winter, we have reviewed the Silta Finance story to better future-proof it against challenging market conditions. We have also made a few difficult decisions and reduced the team to a core of 9 people. This will affect the speed of development work, but at the same time, it will also help extend our runway.

Silta’s strategy is therefore to focus on due diligence and OTC financing deals for the next 6–12 months to prove our business model. In parallel, we continue to explore the potential benefits of hosting our loan pools. For Silta loan pools to succeed, we will need suitable liquidity providers genuinely interested in infrastructure projects and the real interest rates these projects generate.

After the events seen this year, we are ever more confident on the need for robust due diligence in web3, and we have a positive outlook on the next year for real world assets in DeFi. Our mission remains the same: to help infrastructure developers to access the debt financing to make sustainable projects a reality and make a positive impact in the world. With any questions, don’t hesitate to contact us at contact@silta.finance.

Disclaimer: This article is for informational purposes only and is not intended as any kind of investment advice. Read our full legal disclaimer here. For further information, email us at contact@silta.finance.

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Ben Sheppard
Silta Finance

Co-founder of Silta Finance — bridging DeFi and TradFi to impactful infrastructure. Innovator, change-maker and father.