Case Study: How Index Coop Unlocks Capital Efficiency with Credit Coop
In decentralized finance (DeFi), capital inefficiency is holding back growth. Traditional lending protocols require up to 150% collateralization, locking away assets. Rigid parameters force builders to make a difficult decision: lock away assets or limit growth. Credit Coop is changing this paradigm through an innovative approach that requires just 12.5% collateral upfront. Our partnership with Index Coop demonstrates how this transformation is changing how businesses secure loans, opening up new possibilities for flexible and efficient growth strategies.
Capital Efficiency: 12.5% vs. 150% Collateral Ratio
Lending protocols often require overcollateralization of up to 150% of the loan value. For the user, they are pledging $3 to borrow $2. It's this kind of overcollateralization that keeps teams awake at night, watching capital sit idle that could be driving growth. Credit Coop's innovation changed this equation dramatically: post 12.5% collateral upfront. That's it.
"Credit Coop's lending model unlocked the ability for us to secure credit without sidelining a significant portion of our treasury assets. It's a huge win for capital efficiency," shares Anthony Bowman, Product Manager at Index Coop. "Compared to Aave, Credit Coop's solution is 12x more capital efficient. This allows us to deploy more capital to scale our product offerings.”
Flexible and Tailored Solutions
Capital efficiency is just the beginning. One of the most compelling aspects of Credit Coop’s platform is its ability to offer tailored solutions. Rather than locking businesses into rigid lending structures, Credit Coop’s "mix-and-match" approach to collateralization allows organizations to combine different forms of collateral. For Index Coop, this means being able to integrate their revenue streams with a smaller upfront collateral requirement to secure a loan.
"The flexibility to structure loans based on the combination of our revenue streams and low upfront collateral, gives us the freedom to grow without the usual liquidity constraints," Bowman adds. This flexibility has been crucial for Index Coop, allowing them to:
- Scale product liquidity without depleting treasury reserves
- Launch new structured products more efficiently
- Grow TVL while optimizing capital deployment
Unlocking Opportunities
Index Coop's success with our platform isn't just a case study, it's a blueprint for how onchain credit should work. By rethinking how deals are structured, we are enabling a new wave of innovation that extends far beyond a single organization. Our capital-efficient model unlocks opportunities for any organization facing similar collateral constraints. With $20 million in credit already deployed and zero defaults, we're proving that capital-efficient borrowing and lender security can coexist. Credit Coop offers a more adaptable, flexible, and efficient financing solution for the entire DeFi ecosystem.
Upcoming Partnership Developments
Index Coop, a pioneer in DeFi since 2020 with over $56M in current Total Value Locked (TVL), continues to push the boundaries by creating structured products that simplify complex crypto investments. Through our partnership, they aim to make it easier for both retail and institutional investors to participate in these innovative financial products.
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About Index Coop: The Index Coop builds decentralized structured products that make crypto simple, accessible, and secure.
About Credit Coop: Credit Coop is a private credit platform improving financing for businesses by turning future cash flows into collateral through smart contracts. This innovative approach offers businesses a more flexible and capital-efficient way to secure growth capital, addressing the limitations of traditional lending models. With $20 million in credit already deployed and zero defaults, Credit Coop is driving the growth of businesses.
