Arboreum

{"ops":[{"attributes":{"bold":true},"insert":"Recipient of Wave III ConsenSys Grant for Social Impact."},{"insert":"\n\n"},{"attributes":{"italic":true},"insert":"The world needs banking, but it does not need banks."},{"insert":"\n\nAt "},{"attributes":{"link":"https://www.arboreum.dev/"},"insert":"Arboreum"},{"insert":", we’re looking to change the way that people access credit.\n\nWe enable and maintain credit-lending networks which are funded and utilised by their participants, reducing reliance on formal financial institutions. At the moment, we are specifically targeting regions where informal credit solutions have flourished due to the inability of institutional finance to serve their audience effectively, often due to either geographic distance or insufficient credit history.\n\nOur risk-underwriting model treats the reputation of a borrower as a proxy for their credit score, allowing us to gauge risk and price loans, even in the absence of a formal credit profile. At the core of our solution is the notion of `lines of trust', where trust is defined as the maximum that one is willing to allow another participant to borrow. Borrowers source loans from their direct trust lines, and lenders novate their loan exposure by negotiating lower interest-rate loans from their own trust lines in turn (which repeats as far as possible).\n\nOur product solves a common global problem - even within the United States, a majority of millennials do not have a formal credit score, and legislation such as the SAFE Act has had the unintended consequence of producing significant rejection rates for credit products amongst both millennials and Gen-Z.\n\nWorldwide, 1.8 billion people rely on their family and friends for credit, forced into an informal sector characterised by high interest rates and/or predatory practices, with no way for successful credit usage to be used as a basis for entry into the formal sector. Our product enables borrowers and lenders alike to interact with each other in the informal manner in which most of our users are accustomed to, but also produces a concrete history which can be used as the basis on which a formal credit score can be built.\n\nIntroductory video: "},{"attributes":{"link":"https://www.youtube.com/watch?v=fMWjdX-ThMQ"},"insert":"https://www.youtube.com/watch?v=fMWjdX-ThMQ"},{"insert":"\n\nJoin our "},{"attributes":{"link":"https://discord.gg/wj98yJC"},"insert":"Discord"},{"insert":"!\n\n------\n\n"},{"attributes":{"bold":true},"insert":"Progress Since CLR Round 7 Started"},{"insert":"\n\nAfter the current round started, we were offered a place in the October cohort of the ConsenSys Labs Tachyon Accelerator (https://labs.consensys.net/tachyon/).\n\nUltimately, we chose to decline the invitation, as we're slightly further along in development than Tachyon's target audience, but would like to thank ConsenSys for the opportunity!\n\nIn addition, we've signed up another two companies - a plastic component manufacturer and a steel castings foundry - and received our first loan request, which we aim to have disbursed before the Gitcoin round ends.\n\nThings are finally moving - thank you all for the support!\n\n------\n\n"},{"attributes":{"bold":true},"insert":"Development Progress Since CLR Round 6"},{"insert":"\n\nLet's start off with the really important stuff: "},{"attributes":{"bold":true},"insert":"we're live"},{"insert":"! As of two weeks ago, our beta MVP was launched within a solar energy company in Mumbai, India. Said company offers loan facilities to its' employees of up to two months salary, and had previously been offering these loans at zero percent interest. Due to the ongoing pandemic, they noticed that they were receiving a significant increase in simultaneous applications for loans, and could not meet them all. We've stepped in with our own funding pool, and opened up the possibility for fellow employees within the company to add their own funds to the pool in order to receive between 10-20% APR on utilised funds. We'll be sure to provide updates on how this MVP progresses.\n\nMore widely, we have another dozen or so companies who have volunteered to pilot our product with their own employees, with headcounts ranging from 50 to upwards of 6,000. This allows us ample opportunity to a) increase our active user base, b) A/B test network parameters, and c) iterate features that are still in development whilst still gathering data from pilots running in parallel. During the roll-out of these additional pilots, we will introduce our pricing model (i.e. initial setup fee, small fees on loan principals disbursed and lender portfolios managed), with the aim of the most cost-effective credit solution within the market.\n\nYou can view a demo of our product dashboard by visiting "},{"attributes":{"link":"https://app.arboreum.dev/demo"},"insert":"https://app.arboreum.dev/demo"},{"insert":" - right now, usage of this dashboard is constrained to registered users within our pilots, but it doesn't hurt to be able to look! :)\n\n------\n\n"},{"attributes":{"bold":true},"insert":"Model Pivot Since CLR Round 6"},{"insert":"\n\nIn the time since the last Gitcoin round, we have pivoted towards a simpler lending model (with a single lending pool, and the option for people to act as ‘supporters’ for a loan application), and focused on adoption by companies rather than on a user-by-user basis.\n\nThe reason for our pivot is that we were finding it difficult to convey the idea of repeatedly novating (taking on intermediate loans at less expensive terms to offset loan exposure) amongst network participants to potential users, despite it being a net benefit for all involved. As such, we’ve retained the core notion of loans being funded by networks, but temporarily dropped the notion of indirect lenders, and introduced the concept of supporters - first-loss-bearing co-lenders who do not put the balance of a loan in escrow. The degree to which these supporters offer to fund a loan directly impacts the interest rate that a borrower receives for the remaining principal (funded by the pool). In exchange for their higher exposure, these supporters receive a higher interest rate than that received by lenders comprising said pool.\n\nOur reason for the focus change in adoption is that many companies in India already offer an ‘emergency loan’ service to their employees where - for example - they can borrow up to twice their monthly salary. Given the pandemic (and the increase in employees simultaneously applying for these loans), we found that we received a great deal more traction by offering the ability to place the funding pool in the hands of employees (akin to a credit union), offering them an additional instrument for investing their funds in a safe environment, and reducing the financial pressure on companies.\n\nWe realised that focusing on deploying on this basis - at this stage of our growth - makes more sense than searching for/onboarding users from disparate locations: companies come pre-equipped with their own social networks, and employees of companies that offer these emergency loan services would likely be onboarded as part of the migration from the company-owned service to the employee-owned one. In our current model, supporters must be employees of the same company as the borrower, and risk is reduced by the fact that part of the loan principal is collateralised by the salary of the borrower (as, in the event of default, it is far easier to route funds from a defaulted borrower to their lenders when working within the same payroll system).\n\nWe're excited to have you join us.\n"}]}