GoldFinch. Key difference between the Senior Pool LP and Backer roles.

Let's start with the fact that GoldFinch is a decentralized credit platform that contributes to expanding access to financial services. This is an important DeFi project that has a great future ahead of it, if it turns out to implement everything that is being conceived.

There are actually 4 roles in the GoldFinch system: borrowers, auditors, backers and liquidity providers. Clearly, the interaction scheme can be seen in the picture:

In this article, I would like to analyze the key differences between the Senior Pool LP's and backers. Initially, a potential borrower presents his project (for example, a technology startup), it is considered primarily by auditors and, if it has passed their verification, then backers who have the competence to evaluate this project and provide capital with the first loss enter next. Backers should initially look for good borrowers, make high demands on them and be able to hold borrowers accountable. During the consideration of the borrower's application, backers can ask various questions, request additional documents to better understand and evaluate the project. And then, based on their analysis, they invest their money and transfer the junior tranche. Further, when the protocol sees a sufficient number of backers, it considers the pool trustworthy and automatically executes the senior tranche with the senior pool (which is provided by liquidity providers). But in this article, I would like to analyze the key differences between liquidity providers in the Senior Pool and backers.

As can be seen from the above, the obligations of backers are much higher than those of liquidity providers, since they not only provide funds, but also do the main operational work, while liquidity providers only provide funds. Why not just be a liquidity provider, then? The answer to this question can be found in the following picture:

The backer receives an increased yield for their additional responsibilities. The liquidity provider gives part of the profit received from the provision of capital to the sponsor (20%), which ultimately leads to an increased profitability of the sponsor. So, Everyone should decide for himself which role is more suitable for him.