Security Model

The central rule is simple: lender funds do not go to the borrower wallet.

Controls

• Direct lender-to-supplier payment
• Purpose-bound credit requests
• Supplier domain allowlists
• Senior repayment liens
• Hard liquidation value requirement
• Insurance reserve accounting
• ERC-8004-compatible reputation events

Default handling

On missed deadline or default, c402 liquidates available recovery sources and records any remaining shortfall against the borrower profile.

recovery = collateral + backing liquidation value + reserve
shortfall = senior claim - recovery

Current limitation

The deployed service currently uses in-memory state. Production public credit markets should add durable storage before relying on it for real balances.