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. This protects lenders through verified borrower identity, capacity limits, and accountability.
Why Whitelisting?
Without collateral, lenders can't seize assets on default. Whitelisting provides:
- Identity verification — Know who's borrowing
- Capacity limits — Maximum exposure per borrower
- Reputation tracking — History of repayment behavior
- Accountability — Legal recourse if needed
Whitelist Process
- Application — Contact the Coalesce Finance team and provide business information
- KYC/KYB — Complete identity and business verification, sign legal agreements
- Evaluation — The team reviews business legitimacy, financial health, use of funds, and repayment capacity
- Approval — A whitelist manager creates an on-chain entry and sets your maximum borrow capacity
- Ongoing monitoring — Repayment behavior is tracked, and capacity is adjusted based on performance
Capacity
Capacity is the maximum USDC a borrower can have outstanding at once across all their markets.
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 |