Factor’s economic model is designed to align incentives between investors and underwriters while ensuring predictable, short-duration, real-world yield. The structure is simple, deterministic, and driven entirely by receivable performance—not token emissions, leverage, or synthetic yield.

8.1 Receivable Yield

Receivables financed on Factor originate from established factoring markets such as:

• Healthcare reimbursement claims
• SMB invoice factoring
• Real estate draw financing
• Specialized credit receivables

These receivables historically generate 22–42% annualized gross yield, depending on:

• Industry
• Counterparty risk
• Tenor (30–120 days)
• Geography
• Factoring discount rate

Formula (approximate annualized gross yield):

Gross Yield = (Invoice Discount / Invoice Value) × (365 / Days to Maturity)

Factor’s model captures this real-world economic yield and distributes it between investors and underwriters based on performance.

8.2 Underwriter Stake (First-Loss Capital)

Underwriters declare an Expected Default Rate (EDR) for each receivable batch.