> For the complete documentation index, see [llms.txt](https://docs.creditcoop.xyz/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.creditcoop.xyz/start-here/what-is-credit-coop.md).

# What is Credit Coop?

Credit Coop is onchain credit infrastructure that lets payment companies borrow against their settlement flows — and lets capital providers fund those loans through Lending Vaults.

Credit Coop is credit infrastructure for the payments economy, built onchain.

Payment companies — card issuers, processors, on/off-ramps — generate large, predictable settlement flows every day. But because their value moves *through* them rather than sitting *on* their balance sheet, traditional lenders struggle to underwrite them. Credit Coop solves this by securing credit directly against the settlement flow itself.

## Underwrite the flow, not the firm

Traditional credit asks: *what does this company own?* Credit Coop asks: *what does this company reliably process?*

A borrower's revenue-generating smart contracts are placed under the control of the **Spigot** — a smart contract that programmatically escrows and splits incoming cash flows. A defined share of every dollar that flows through automatically services the debt; the rest is released to the borrower to run their business. The lien isn't a legal promise enforced after the fact — it's enforced in code, on every transaction, before funds ever reach the borrower.

## The three primitives

* **The Secured Line of Credit** — a revolving credit facility for a single borrower, funded by one or more lenders, in one or more tokens, each on individually negotiated terms.
* **The Spigot** — a smart contract that takes programmatic first claim over a borrower's onchain cash flows. Revenue is escrowed at the source and split between the borrower and the facility according to agreed terms, with the split enforced in code. If the borrower defaults, recourse is automatic.
* **Vaults** — ERC-7540 lending vaults that pool depositor capital and allocate it across credit lines and liquid yield strategies, managed by an independent Vault Curator.

## Key properties

* **Programmatic recourse.** The Spigot collects borrower cash flows automatically. Repayment does not depend on the borrower initiating a transfer, and lenders have continuous onchain visibility into the collateral performing.
* **Tokenized credit positions.** Every lender position is minted as an ERC-721 Credit Position Token, enabling position-level accounting, transfer (where permitted), and syndication.
* **Flexible security.** Facilities can be secured by cash flows via the Spigot, by escrowed asset collateral (ERC-20, ERC-4626 and Uniswap V3 positions), or both.
* **Mutual consent by design.** Every material term — rates, deposits, deadlines, fees, refinancing — requires an onchain agreement between the counterparties, protected against mid-proposal term changes by a nonce mechanism.
* **Onchain execution.** All lending activity settles onchain: transparent, auditable, and composable with the wider DeFi ecosystem.

## How the money moves

```mermaid
flowchart LR
    subgraph Revenue["Borrower's settlement flow"]
        C[Cardholders / customers] --> RC[Revenue contracts<br/>owned by Spigot]
    end

    RC --> S{{Spigot<br/>escrow & split}}
    S -->|operator share| B[Borrower<br/>operations]
    S -->|owner share| L[Secured Line of Credit<br/>interest + principal]

    L --> CS[Credit Strategy]
    CS --> V[(Lending Vault)]

    D[Depositors] -->|deposit| V
    V -->|yield-bearing vault tokens| D
    V -->|deploy capital| CS
    CS -->|fund credit line| L
    L -->|draw| B
```

Every arrow in this diagram is a smart-contract interaction you can verify onchain.

## Protocol generations

The protocol has evolved through generations: **v1** (the original Secured Line of Credit), **v2** (the current live protocol — tokenized credit positions, multi-beneficiary Spigot, expanded collateral, and the Vault stack), and **v3** (in development). This documentation covers the current protocol; v1 material is preserved in an [archived section](/developers/v1-developer-material.md) for reference.

## Where to go next

* New to the protocol? Read [How It Works](/start-here/how-it-works.md) for the end-to-end walkthrough.
* Know what you're here for? Jump to your track via [Who It's For](/start-here/who-its-for.md).
* Want the numbers? See [Traction & Trust](https://github.com/credit-cooperative/docs/tree/master/creditcoop/start-here/traction-and-trust.md).


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