Invoice Discounting Using Kelly Criterion by Automated Market Makers-like Implementations

Funding shortages are a persistent issue, particularly for small and medium-sized enterprises (SMEs), the problem tends to worsen cyclically. The market factoring invoice discounting aims address delays in payment commercial invoices. These involves sellers present unpaid invoices financial organizations, typically banks, who provide an advance payment. implementations of services without intermediaries blockchain state art all based on publication on-chain invoices, use know your customer (KYC) mechanisms, over-collateralize This article proposes new, decentralized approach lending that completely eliminates does not require strong KYC, yet it is reasonably resilient. uses liquidity pools associated heuristics create model risk compensation. In this model, formula measures contributed collateral late or non-payment, using Kelly criterion calculate optimal premium funding said pool. algorithm’s performance tested many scenarios involving several amounts, collaterals, delays, non-payment rates. study also examines distribution policies hack bogus, non-payable outcome resilient wide range invoicing scenarios, including 5% rates 10% bogus provides sound profit providers. resilience enhanced by over partially collateralized from 50 70%, resulting withdrawal every 30 days, making first protocol loanable funds over-collateralization be profitable