VECC ensures the security and validity of collateral through a DAO-driven custodianship model. Instead of relying on centralized entities, the DAO directly manages and verifies assets. Collateral is either tokenized or transferred into a DAO-controlled custody account, ensuring transparency and preventing fraud. This approach provides trustless lending for both borrowers and lenders.
VECC uses an auction-based lending model, where borrowers submit loan requests and lenders bid on those loans in a transparent and competitive process. In case of default, the DAO automatically handles liquidations to recover funds and protect lenders, ensuring fairness and minimizing risks. The DAO also manages the liquidation parameters, adjusting them as needed based on market conditions.