Whitelisting#
How borrowers get approved to use Coalesce Finance.
Overview#
Coalesce Finance is an uncollateralized lending protocol. Instead of requiring collateral, borrowers must be whitelisted after verification before they can create markets and borrow. Whitelisting is an eligibility check — it helps verify who a borrower is, not whether they will repay. KYB and identity verification are not an assessment of creditworthiness, are not a recommendation or endorsement of any borrower, and are not a guarantee of any borrower's identity, solvency, or performance. Whitelisting provides no protection against borrower default. Each loan is a direct credit relationship between lender and borrower, and lenders bear all credit risk.
Why Whitelisting?#
Loans on Coalesce are unsecured: there is no collateral to seize on default. Whitelisting establishes:
- Identity verification — KYB and sanctions screening help verify the identity, business existence, and sanctions eligibility of each borrower
- Capacity limits — A protocol-configured cap on each borrower's outstanding borrowing
- On-chain history — Each borrower's borrowing and repayment activity is publicly visible on-chain
Whitelisting does not protect lenders against default and is not a substitute for collateral. Lenders are solely responsible for evaluating each borrower and each loan and for conducting their own due diligence.
Whitelist Process#
- Application — Contact the Coalesce Finance team and provide business information
- KYC/KYB — Complete identity and business verification, sign legal agreements
- Screening — Verification covers identity, business existence, and sanctions eligibility only; it is not an evaluation of financial health, repayment capacity, or creditworthiness
- Approval — A whitelist manager creates an on-chain entry and sets your maximum borrow capacity
- Ongoing eligibility — Identity and sanctions eligibility remain subject to ongoing screening, and capacity is a protocol configuration that may be adjusted or revoked
Capacity#
Capacity is the maximum USDC a borrower can have outstanding at once across all their markets. It is a protocol-configured operational limit, not a credit rating or an assessment of how much a borrower can safely repay.
Borrower: Acme Corp
Max Capacity: 5,000,000 USDC
Market 1: Borrowed 2,000,000 USDC
Market 2: Borrowed 1,500,000 USDC
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Total: 3,500,000 USDC
Remaining capacity: 1,500,000 USDC
On-chain checks prevent exceeding capacity. If a borrow would exceed the limit, the transaction fails.
Deactivation and Blacklisting#
| Action | Effect |
|---|---|
| Deactivate | Can't create new markets (existing markets stay active) |
| Blacklist | Blocked from create/deposit/borrow/withdraw paths; repayment paths remain allowed by design |
Deactivation is managed by the whitelist manager. Blacklisting is managed by an external compliance program and is reserved for emergencies such as fraud, legal issues, or protocol safety concerns. Borrowers removed from the whitelist can still borrow from existing markets; deactivation blocks new market creation, not active market borrowing. Operationally and on-chain, borrowers with outstanding debt cannot be de-whitelisted until debt is repaid.
Blacklist Enforcement Modes#
The protocol admin configures how missing blacklist accounts are handled:
| Mode | Behavior |
|---|---|
| Fail-open | If the expected blacklist PDA does not exist, the account is treated as not blacklisted. |
| Fail-closed | If the expected blacklist PDA does not exist, the check fails and the instruction is blocked. |
In both modes, if a valid blacklist account exists and marks the address as blacklisted, the instruction is rejected.
Roles#
| Role | Responsibility |
|---|---|
| Whitelist Manager | Adds/removes borrowers, adjusts capacity |
| Protocol Admin | Sets the whitelist manager |