Digitization

The defining idea of PandiFi is loan digitization. PandiFi's loan digitization service has the following features:

Digitized loans are represented as an extension of the ERC-721 non-fungible token standard. In fact, they can be interoperate with any existing platform that supports the ERC-721 standard. There is a single digitizer contract representing PandiFi V1.
Like other non-fungible tokens, PandiFi's digitized loans are not divisible. This is a deliberate decision. While fractionalization helps increase liquidity in the short term, we believe it harms both investors and borrowers in the long run¹²³⁴. PandiFi seeks to use blockchain technology to improve liquidity and reduce borrower costs without reinserting the frictions that plagued the securitization industry during the global financial crisis.
The digitized loan smart contract will be reployed - with minor modifications - infrequently to account for new data requirements and new loan products. As PandiFi grows, there may be a need to create a new digitizer to account for new products. The PandiFi V1 digitizer is optimized for U.S. residential mortgages, but it should be able to accommodate most closed-end consumer loan products. Note that new deployments are not upgrades. Rather, they will be explicitly labeled in a way that clearly differentiates each new deployment e.g., V1, V2, etc.
Primary data fields are on-chain; secondary data fields and personally identifiable information (PII) are available off-chain. Storing data on chain is expensive. For the digitizer to interact with other smart contracts, key data fields must be available on-chain. How does PandiFi decide what's off-chain vs on-chain? The rule is that if a data point might be useful for a homogenizer's eligibility criteria, then we put it on-chain. Otherwise, it's off-chain. All PII is also off-chain for obvious reasons and can be accessed per our off-chain data access policy. In generally, we think the vast majority of investors will be able to make an information investment decision based on what's available on-chain.
Digitized loans support cash flow distributions. Unlike ordinary NFTs, PandiFi's digitized loans do support cash flows distributions directly on the blockchain.
PandiFi V1 leverages USDC, but is stablecoin agnostic The digitizer is designed to work with a specific stablecoin: USDC. However, the PandiFi V1 digitizer contract can be modified to use any other ERC-20 stablecoin e.g., DAI, USDT. In there is instability in USDC for some reason, PANDI token holder can collectively vote to change the primary stablecoin.
PandiFi does not service loans. On behalf of digitized loan investors, PandiFi engages with third party servicers. Those servicers collect USD and deposit the money into a bank account. Then PandiFi converts the USD to USDC and distributes the funds to the digitizer smart contract. Note that PandiFi does not assert any rights to the servicing. If a digitized loan investor directs PandiFi to change the servicing or directs the servicer to make a certain decision, it is their right.
Investors can claim the underlying loan In certain cases, an institution might prefer to acquire the underlying loan. For a nomimal fee, this can be done. PandiFi will burn the NFT associated with the loan and deliver the underlying loan in its traditional form.
PandiFi does not perform due diligence on loans. PandiFi is also not in the business of performing due diligence on loans.
That said, third party diligence providers can be engaged to perform diligence and results of that diligence would be accessible on-chain. (Note: Our first set of homogenizer contracts will require third party diligence except for sellers that are licensed to sell to Fannie Mae or Freddie Mac.)
PandiFi does not perform loan data due diligence. PandiFi is also not in the business of scrubbing data. Typically, due diligence firms also check data during their due diligence review.