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Krredit - DeFi Loans without collateral







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{"ops":[{"insert":"Imagine if everybody on the planet could borrow money when they need it most, regardless of their credit scores or banking status. \n\nKrredit brings the biggest value proposition of Centralised Finance- Unsecured Lending, to DeFi. "},{"attributes":{"bold":true},"insert":"Today, 7 out of 10 people have no formal way to borrow money, even in an emergency."},{"insert":" The unemployment caused by the virus has worsened the demand/supply mismatch in unsecured lending markets. Banks are content to lend to only the highest credit scorers, leaving the bulk of the population excluded from the credit system.\n\nThis is a wonderful opportunity for Decentralised Finance to solve a massive, real-world problem that banks have failed to solve. Of course, under-collateralised loans are vulnerable to default; but with Krredit we've worked out a system of incentives that encourage sufficient repayment of loans; along with a mathematical model that always keeps default exposure for lenders very low. \n\nBut won’t everyone default?"},{"attributes":{"header":1},"insert":"\n"},{"insert":"\nSingle turn Game Theory would predict that a person given an unsecured loan would always default, in the absence of consequence. However, Multi-turn game theory, as seen in the repeated prisoners dilemma, tells us that tit-for-tat is the most efficient strategy when you have to repeatedly interact with the same agent. This implies that "},{"attributes":{"underline":true,"italic":true},"insert":"repeated incentives may be sufficient to ensure repayment, without any coercion"},{"insert":". \n\nOur unique mathematical model returns 10-18% ARR to lenders, "},{"attributes":{"italic":true},"insert":"even with a 30-40% default rate."},{"insert":" The interest charged to borrowers will initially be high (~20%), but the alternative to most people is no credit whatsoever, particularly in developing parts of the world. You can find more details in "},{"attributes":{"link":"https://medium.com/@kenaudekarhetal_1196/unsecured-defi-loans-for-everyone-14d381f1936a"},"insert":"this Medium article"},{"insert":" . \n\n"},{"attributes":{"color":"#000000","bold":true},"insert":"Crucially, the Default exposure as % of Principal is always below 1% for all loaned amounts. "},{"attributes":{"color":"#000000"},"insert":"The mathematical model showing how this works can we viewed in "},{"attributes":{"color":"#000000","link":"https://docs.google.com/spreadsheets/d/1VclvavlmjO3WThc0Y79atCgmIxQa912ygjYu-bmH-3s/edit#gid=0"},"insert":"this spreadsheet"},{"attributes":{"color":"#000000"},"insert":"."},{"insert":"\n\nDue to the high potential returns and low default exposure, we're confident lenders will participate. Because it is open to everybody, borrowers will participate. \n\nKrredit will go live on the ethereum mainnet within a month, with a custom UX for easy participation. Beyond development, we will utilise the grant money for the initial lending pool, which will thereafter grow organically as borrowers and lenders participate.\n\nJoin us in replacing banks by providing easy credit to everyone on the planet!\n\nP.S. you can find a great demonstration of multi-turn game theory is "},{"attributes":{"background":"#ffffff","link":"https://ncase.me/trust/"},"insert":"here"},{"insert":".\n"}]}

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