Auto-Repayment

Auto-repayment is the mechanism by which AsiliChain loans repay themselves — triggered by the physical act of coffee being exported, with no collection agent, no manual payment, and no default risk from borrower non-cooperation. The exporter confirms the EXPORTED stage after obtaining the UCDA export permit — see Export Certification & Physical Journey for the full certification process.

How It Works

sequenceDiagram
    participant BUY as European Buyer
    participant EXP as Exporter Dashboard
    participant M as Mantle (Contracts)
    participant LV as LendingVault.sol
    participant H as Hedera HCS
    participant KP as Kotani Pay
    participant F as 👨‍🌾 Farmer MTN MoMo
    BUY->>EXP: Pays USDC for shipment
    EXP->>M: TraceLog.updateStage(batchId, EXPORTED)
    M->>LV: EXPORTED event detected
    LV->>LV: Calculate: principal + interest
    LV->>LV: Repay MFI pool (principal + interest)
    LV->>LV: Deduct 4% AsiliChain protocol fee
    LV->>M: CreditScore.update(farmerID, +50)
    M-->>H: SETTLED stage recorded
    LV->>KP: POST /payout (net balance to farmer)
    KP-->>F: UGX credited to MTN MoMo

The Settlement Calculation

For a loan of $450 USDC at 16% APR over 6 months:

Component	Amount (USDC)	Recipient
Principal repayment	$450.00	LendingVault → MFI pool
Interest (8% MFI yield)	$18.00	LendingVault → MFI pool
AsiliChain protocol fee (4%)	$9.00	ProtocolFee.sol
Credit loss reserve (2%)	$4.50	Smart contract buffer
Remaining from buyer payment	$518.50+	Farmer via Kotani Pay

Why This Eliminates Default Risk

Traditional agricultural microfinance fails on collection — a borrower who has spent the loan cannot repay even if willing. AsiliChain’s auto-repayment resolves this structurally:

Traditional model	AsiliChain model
Seasonal repayment dependent on farmer finding cash	Repayment triggered by buyer’s USDC payment
Collection agent required per borrower	Zero collection infrastructure
Default when harvest fails or price drops	LendingVault pauses on drought risk signal; forbearance built in
No consequence for strategic default	CreditScore −100; future loans blocked protocol-wide

Forbearance Protocol

If a harvest fails or market conditions prevent export:

1. Cooperative triggers LendingVault forbearance request
2. 3-of-5 multisig governance vote required to approve
3. 90-day extension granted — no penalty during forbearance
4. If batch is subsequently exported, auto-repayment executes normally
5. If loss is confirmed total, credit loss reserve absorbs shortfall; MFI pool protected up to reserve threshold

CreditScore Effect

Every auto-repayment that executes successfully adds +50 to the farmer’s on-chain CreditScore. After three successful loan cycles, a farmer at 650 qualifies for a higher LTV tier and larger loan ceiling — creating a path from subsistence-scale to cooperative-scale financing.