Frequently Asked Questions

Welcome to the Bluejay Finance FAQs page! The following page is designed to answer the most common questions about Bluejay Finance, but if you need more information or have further questions, we encourage you to join our community on Discord. Our team and community members will be happy to help you out.

FAQs on Bluejay Earn

In extreme market volatility scenarios, what is the risk exposure for bluSGD in loan pools that are funded?

bluSGD ability to track SGD remains the top priority of the protocol. The protocol will continue to ensure that we hold good quality collaterals against issued stablecoins, providing liquidity to trade them and be on top of crises that can potentially threaten its stability.

In addition, once a loan pool is funded and the funds are drawn down, the borrowers would be off-ramping the stablecoins into fiat to deploy them for productive usage. During this time, the risk exposure to bluSGD is minimized.

How does the platform ensure funds are safe?

The platform makes no guarantees on the security of the funds and is provided as-is.

Product Risk

Products on the platform are offered from the borrowers directly and Bluejay does not make guarantees on the accuracy of information nor on the deal itself.

Lenders are encouraged to perform due diligence on the borrower with information provided to ensure they understand the risk involved.

Platform Risk

While we make the best attempt to eliminate platform risk and ensuring that the platform operates in predictable manner by undergoing code audit for major releases, we make no guarantees on the products.

What are the team doing to stay ahead of potential regulations changes?

As Bluejay neither operates fiat to crypto on/off ramp facilities nor transacts directly with the consumers, we have limited regulatory exposure than traditional exchange.

The team works with legal consultants to ensure we can comply with regulations set forth by the authorities and to remain abreast of changes.

Offers on the Bluejay Earn platform are not directly offered by the protocol but rather by individual businesses or FinTechs themselves. These entities are solely responsible to ensure that they are compliant to local regulatory requirements and investors are responsible to ensure that they can participate in the individual deals.

The team has plans to provide tools to borrowers who may require more stringent requirements on the lenders in the future to help our borrowers stay compliant to their local regulatory requirements.

How can Bluejay assess the risk of the borrowers?

We are only acting as the marketplace between lenders and borrowers. As we operate a decentralized platform, borrowers and investors are ultimately responsible for their own participation.

Investors should perform their own due diligence on whether they want to lend to a loan pool. Borrowers are strongly encouraged to provide as much info as they can to have a higher success rate of funding and to ensure their deal is competitive.

There will be different types of loans that the borrower can propose and each type of loan carries a different type of risk involved. Some are bonds, some are collateralized loans, it really depends on the borrower's needs and capabilities when creating a loan pool.

Each deal may have a dataroom where more sensitive information may be provided by the borrowers themselves for the investors’ due diligence.

Information on the deal page are provided by the borrowers and are presented as is. Bluejay does not provide any warranties or insurance against accuracies of information or subsequent repayment of loans.

How are you guys going to scale the business?

We plan on working with larger partners that are doing loan origination, so when we onboard a partner, they onboard potentially dozens of active deals. This works in favour of lenders as the risk is being spread out across multiple individual loans.

The team also plans to make the process of creating decentralised loan pools much easier for all so that anyone will be able to raise funds for their needs.

Is Earn licensed or regulated by any authorities?

Earn is a decentralized marketplace for borrowers and lenders, itself is not licensed or regulated by any authorities.

Borrowers on the platform are encouraged to seek their own legal opinion when choosing to borrow funds on Earn.

Lenders on the platform are encouraged to perform their own due diligence on the different deals and the risk involved when dealing with unregulated product. And in cases where the product is offered in a regulated environment, to fully understand what that means for you.

Aren't default rates going to be really high for these businesses?

Defaults can exist in many forms. In strict terms, a loan can be in the default status even if they are one day late in interest payments. In many cases, even a defaulted loan can eventually be repaid in full with additional interest or be restructured in a way that benefits both borrowers and lenders.

Every deal on the platform are different and have different risk profiles. You may use these guidelines to help you better assess the risk associated with each deal:

  • A short term loan is usually less risky than a long term loan

  • An entity that has good credit score is usually less risky than another that has worse score

  • An entity that has history of low or zero defaults is less risky than another without such history or have poor history of returning funds

  • A deal with lower interest rate is likely to be less risky (these entities likely have access to other low interest rate loans as well)

  • A structured product with many different loans is less risky than a loan to a single entity

However, lending can be a risky investment and may not be suitable for everyone. You are discouraged from participating if you are unable to assess the risk.

Why should someone use bluSGD for Earn instead of other stablecoins?

Borrowers are free to raise capital in any assets. However, they do not need to pay a fee if the pool is denominated in bluStables. The fee schedule can be found here.

Lenders will have to deposit the requested assets by the borrower or search for another pool which meets their requirements.

What is Bluejay’s role in Earn when there are borrowers and lenders on each side?

Bluejay’s role in Earn is as a facilitator, or a marketplace between investors and borrowers.

Borrowers and investors are directly responsible to one another.

Investors should perform due diligence on whether they want to lend to a loan pool given the information provided by borrowers. If they are uncomfortable with the risk or are unable to assess the risk involved, they are discouraged from participating.

Borrowers are strongly encouraged to provide as much info, and offer competitive returns, so that they can attract more funds to their deals.

What happens in the event of a default? What could you do as a lender?

In the event of a delinquency (ie borrower is behind on payments), borrowers will be charged late fees on their loan. The late fee is imposed on top of the regular interest payment and are specified in the loan terms when the pool is created initially. Once the borrower gets back on schedule, additional fees are no longer being imposed.

In such cases, lenders will be receiving additional interest on their loans but may have a different repayment schedule than what was originally planned for.

In other kinds of default, the borrower may request to restructure the deal with the lenders. Bluejay may act as mediators in such scenarios to help both parties reach a favourable outcome.

It is important that the lenders perform due diligence to understand what type of recourse, is available to the lenders in events of default.

How do I validate that the borrowers in the pools are actually who they say they are?

The initial pools available on the platform has their identity verified by Bluejay. You may access more information about the identity of the borrowers in the Dataroom. The Dataroom provides detailed information about the borrowers, which can help you verify their identity. However, to access the Dataroom, you may need to sign a non-disclosure agreement (NDA) depending on the requirements of the borrower.

What are the main risks I should be aware of if I’m investing into Earn’s pools?

There are many risk associated in investing, some of the risk involves, but not exclusive to:

  • Platform risk

  • Counter-party risk

  • Business risk

  • Interest rate risk

If you are unable to assess the risk involved, you are discouraged from participating in the investment.

How is Bluejay Earn providing access to financial instruments that was previously only available to accredited investors? What is the regulatory framework there?

The platform works to fractionalize existing financial products that are being offered by FinTechs. By grouping the investments together, it can reduce the operational overheads of the FinTech if they have otherwise decided to receive many smaller deposits.

Borrowers are responsible to ensure they are compliant to frameworks or regulatory requirements when they are offering products on the platform.

What happened if there is a default? is it 100% loss or is there insurance in place to get some % of recovery?

As legitimate borrowers receive heavy penalties on defaults, and can severely impair their ability to receive financing on Bluejay Earn or from any other financial institutions, a default often only happens as a last resort, and even so, the deal are often restructured with a different repayment plan.

Recourse mechanism differs from deal to deal and varies from borrower to borrowers It is therefore important to lend to credit worthy borrowers who has ability to repay. Investors are encouraged to perform due diligence on what mechanisms are available to them as well as the credit worthiness of the borrower when choosing to participate in a deal.

Other points on the legal can also be found on our docs.

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