Purpose: To securely capture a portion of revenue and automatically pay interest due. In the event of a default on loan principal, the spigot is used to secure this as well.

Initialization:

When initialized, the smart contract receives the terms of the loan, and after being verified by 4 out of the 5 signers on the multisig (excluding the neutral party), the loan object is instantiated and stored as an object. Inside the terms you would include the hard coded amount of the interest rate (if it's fixed) or whatever metric the loan should be referring to (e.g. a percentage of the revenue if it's revenue based financing), the size of the loan, and the interest rate periods for each loan.

🔐 Security Guarantees:

A high degree of security is needed to ensure that this critical infrastructure cannot be exploited.

There are several safeguards in place to ensure this is the case:

• The initial implementation will stream in stablecoins and Eth
  • Other tokens can be added at a later date once the oracle integration is developed
• Whitelisting to ensure only known addresses can interact with the spigot
• Superfluid payment streams to both reduce complexity and to remove the need to escrow payments
• 3/5 weighted multisigs to approve or deny changes/upgrades to the spigot with the third (neutral) signer only signing if there is a failure to reach agreement.

After the transaction is signed, and approved, the actual flow portion of the spigot begins. If there are multiple assets in the smart contract containing revenue, a hard coded list of assets dictates the order for which the interest payment begins.

Additional Features to be added in a v2:

• Support for additional assets that can be piped through a spigot