Underwriting Criteria

DayFi's protocol does not extend credit in the traditional sense. Instead, it owns infrastructure directly through its affiliated SPVs. However, because a significant amount of ongoing revenues for the protocol's infrastructure is offtake agreements with hosts, the protocol does implement standardized underwriting requirements to limit default risk from hosts.

sGRID has multiple levels of protection to ensure collateral quality:

• All hosts must conform to minimum underwriting standards (in table below).

• Overcollateralization via the junior tranche.

• The systems are geographically distributed across multiple U.S. states.

• In the case of defaults, the collateral (energy equipment) can be repossessed.

• Each solar + storage system is insured for production performance.

• Equipment is only sourced from tier-1 manufacturers with underwriteable manufacturer warranties.

• Protocol revenues will initially be used to support a sGRID reserve fund.

Conditional Approval Item	Rejection Reason
Credit Score	< 680
Bankruptcies	Any in last 48 months
Repossessions	Any in last 36 months
Delinquencies	Any 60+ days
Mortgage Delinquencies	Any in last 12 months
Debt to Income	>= 50%
Stated Household Income	< $60,000
Open Collections	None > $500
Chargeoffs	None > $1,000 in last 24 months

Traditionally, electricity payment streams historically demonstrate resilience across economic cycles. This resilience manifests in consistency of payments. Residential solar leases and loans have a 90+ day delinquency rate of 0.18%. This is significantly better than mortgages (0.50%) and auto loans (3.73%). This is driven primarily by economic rationality - the lessee must procure electricity from somewhere to power their home, and once installed, a solar and storage system offers cheaper and more reliable electricity than the default utility. Meanwhile, yields are typically 200-400 bps higher than either mortgage or auto loans, and 700-1,000 bps higher than treasury yields.

An overview of Solar Financing from NREL can be found here:

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NREL Solar Lending Practices.pdf

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