Klara Credit Engine
The Klara Credit Engine is the core intelligence of the entire ecosystem. If the vault is the heart, the credit engine is the brain. It takes the raw value of your collateral and turns it into real spending power. This is where the magic happens: using crypto without selling it.
The Credit Engine is constantly analyzing your vault, reading market data, calculating health, updating limits, approving card transactions, and syncing everything with the Klara App. It operates quietly in the background but powers every visible part of the platform.
Below is the full breakdown of how it works.
5.1 What the Credit Engine Does
The Klara Credit Engine converts your locked collateral into usable credit. When you deposit assets into your vault, the engine mirrors their value and determines how much you can safely spend.
It handles:
• collateral valuation
• price feed aggregation
• health ratio calculation
• credit line generation
• transaction approval
• live credit updates
• spending analytics
• repayment logic
Everything is done in real time.
Everything updates instantly.
Everything stays onchain or verifiable.
The Credit Engine never touches your actual assets.
It only reads data from your vault.
5.2 How the Engine Calculates Credit
The calculation is simple on the surface but complex under the hood.
It takes three main inputs:
your collateral amount
the live price of that collateral
your required safety margin
Based on these inputs, it determines:
Your maximum credit
This is the highest safe limit you can use.
Your available credit
This updates whenever you spend, repay, or add collateral.
Your health ratio
This determines how safe your position is during market swings.
The engine also monitors market volatility.
If the market becomes unstable, it tightens certain thresholds to keep users protected.
5.3 Mirror Credit: How You Spend Without Selling
Mirror credit is the system that allows you to spend without touching your crypto.
Here is how it works:
• your assets stay untouched in the vault
• the engine creates a credit limit based on their value
• every card transaction draws from that credit limit
• the system settles the payment on the backend
• your collateral remains exactly where it is
This means you can:
• hold long term positions
• avoid taxable events
• avoid missing upside
• avoid market timing issues
• avoid liquidation traps
You essentially get liquidity without losing ownership.
5.4 Real Time Updates and Synchronization
The Klara Credit Engine talks to every component in real time.
It receives:
• vault deposits
• vault withdrawals
• live market prices
• transaction requests
• repayment events
• card control updates
It outputs:
• available credit
• used credit
• collateral health alerts
• approval or decline signals
• spending analytics
If your collateral value goes up or down, your credit line adjusts immediately.
If you add more assets, your limit increases instantly.
If you make a repayment, the system reflects it within seconds.
This makes Klara feel smoother than any traditional bank.
5.5 Health Ratio and Safety Logic
Your collateral health determines how safe your credit line is. The engine constantly tracks:
• your credit usage
• your collateral value
• market volatility
• your minimum required health
• your buffer zones
If the ratio drops too low, you get notified instantly inside the app. You can add collateral or repay credit to restore stability.
If the ratio hits unsafe levels, the liquidation model kicks in, but in a controlled way rather than a full wipeout.
The goal is simple.
Protect the user.
Reduce unnecessary liquidations.
Keep the system stable.
5.6 Transaction Approval Flow
Any time you spend using a Klara card, the transaction request goes straight to the credit engine. The flow looks like this:
Merchant requests payment from the card network.
The card network sends an authorization request to Klara.
Klara forwards the request to the credit engine.
The engine checks your credit availability.
If the limit is enough, the transaction is approved.
The settlement layer logs the usage.
All of this happens in less than a second.
If the transaction looks suspicious or outside your rules, the engine can block it and notify you instantly.
5.7 How Repayments Work
Repayments reduce your used credit and restore your available limit. You can repay using:
• fiat routes (coming soon)
• crypto repayment
• onchain stablecoin transfers
Once a repayment is detected, the engine:
• updates your used credit
• recalculates your available limit
• syncs your health ratio
• logs the event onchain
• updates the Klara App
Everything is instant and transparent.
5.8 What the Credit Engine Cannot Do
To keep the system trustless, the engine has strict limitations.
It cannot:
• move collateral
• sell collateral
• freeze funds
• block vault access
• change your vault balance
• adjust your credit without onchain inputs
• bypass user permissions
The credit engine reads data.
It does not control it.
This is what makes Klara fundamentally different from custody-based credit solutions.
5.9 Why the Credit Engine Matters
Without a system that can mirror crypto value without touching the underlying assets, Klara would not exist. The Credit Engine is the key innovation that enables:
• credit that adapts to crypto markets
• real world spending powered by onchain collateral
• safe borrowing without liquidation traps
• multi chain collateral support
• full transparency in how credit is created
• spending without selling