# AutoFi Credit Vault (afCredit)

Enhanced Yield Through Credit Risk

---
config:
  theme: neutral
---
flowchart TB
    subgraph CreditVault[afCredit Plasma Vault]
        Vault[ERC-4626 Vault<br/>Base Asset: USDC]
    end

    subgraph Fuses[Fuses]
        MF[SupplyFuseMorpho]
        ERC[SupplyFuseERC4626]
        Bal[BalanceFuses]
    end

    subgraph CreditProtocols[Credit Sources]
        Morpho[(Morpho Blue<br/>Senior Tranches)]
        Maple[(Maple Finance<br/>IG Corporate)]
        Goldfinch[(Goldfinch<br/>Real World Credit)]
    end

    Alpha[Alpha Bot<br/>CreditStrategy]
    RiskModel[Credit Risk Model]

    Vault --> Fuses --> CreditProtocols
    Alpha -->|execute| Vault
    RiskModel -->|risk scores| Alpha

    Note1[Target: 5-8% APY<br/>Medium risk<br/>Diversified credit]

# What It Is

afCredit steps up the risk spectrum to capture credit risk premiums. This vault invests in senior secured loans, investment-grade corporate credit, and real-world lending protocols, earning higher yields in exchange for accepting default risk.

# How It Works

The vault allocates across diversified credit opportunities including senior tranches in lending protocols, investment-grade corporate bond exposure, and real-world lending pools (trade finance, revenue-based financing). Strict concentration limits ensure no single borrower or pool receives more than a target percentage of capital. Credit quality is monitored continuously, and exposure is reduced if metrics deteriorate.

# Target Returns

5-8% APY from credit spreads above Treasury rates

# Who It’s For

Yield-seekers comfortable with credit risk
Investors who understand that higher yields require risk
Those wanting exposure to corporate and real-world lending
Users seeking returns between safe Treasuries and volatile equities

# Benefits

Credit Risk Premium: Markets compensate lenders for default risk. By accepting this risk in a diversified manner, investors historically earn 2-4% above Treasury rates.

Diversified Lending: Capital spreads across many borrowers and pools. Individual defaults have limited portfolio impact.

Real Yield: Credit instruments pay regular interest from productive economic activity, unlike speculative assets relying on price appreciation.

Risk-Adjusted Returns: The strategy focuses on senior secured positions with collateral protection.

# Risk Profile

Medium Risk: Defaults can and do occur, especially during recessions when credit losses cluster. The vault aims for diversification and senior positioning to limit damage, but principal loss is possible. Suitable for investors who understand credit risk.

# afCredit Strategy Flow

---
config:
  theme: neutral
---
sequenceDiagram
    participant Alpha as Alpha Bot
    participant Risk as Risk Model
    participant Vault as Plasma Vault
    participant Protocols as Credit Protocols

    Alpha->>Protocols: query available credit opportunities
    Alpha->>Risk: get risk scores for each pool
    
    Alpha->>Alpha: calculate risk-adjusted returns
    Alpha->>Alpha: apply concentration limits per pool

    loop For each opportunity
        alt Yield/Risk attractive and under limit
            Alpha->>Vault: supply to credit pool
        else Risk too high or at limit
            Alpha->>Alpha: skip opportunity
        end
    end

    Note over Alpha: Monitor for defaults or downgrades
    
    alt Credit event detected
        Alpha->>Vault: reduce exposure to affected pool
        Alpha->>Vault: reallocate to safer positions
    end