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Review of community proposals for Decentraland's art and applications
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The Decentraland Land Bank #117

Open Alonzo-Coeus opened 6 years ago

Alonzo-Coeus commented 6 years ago

Introduction One of the major problems with most current block-chain loan systems is that their is no incentive to pay back your loan, this is somewhat mitigated by the fact that you could back a loan with assets or equity. The problem with equity backed loans is the majority of assets could just be sold and re-bought at a later date, without a interest rate if the asset is stable. So I Propose a loan system using land to back the loan. The land asset is perfect for collateral because it's main value is that you can put content on it., so you could spend the money your land is worth and use it at the same time.

How It Will Work The Land Bank will be a ethereum DAO were investors can deposit their money and receive a recite , this recite can be traded into the bank for the persons deposit plus profit from loaning it out (this will be calculated by the equation equity+(sum_mortgage_values * 1-default_rate) * recites / recite_supply). these loan backed recites can become a form of money in themselves so a investor with no ethereum wanted to buy something they could pay buy selling a recite on at bellow market value, if the bank is has loaned out more than can be withdrawn. this system also spreads out the risk from one loan across all investors so each investor contributes a small part to each loan spreading out the risk.

Alonzo-Coeus commented 6 years ago

it is somewhat like a cooperative

AcomaChris commented 6 years ago

Three questions:

  1. There is no established demand for a large scale operation like this - so why do you think it is required?
  2. You want to take decentralized currency (MANA) and add a centralization layer - doesn't this go against the principles of Decentraland?
  3. Banks exist on trust, without trust they fail - why would anyone trust your bank?
Alonzo-Coeus commented 6 years ago

Because it is a smart contract no trust is required, it is not built on trust because of the collateral if anything happens the contract liquidates the land and redistribute the funds to the stakeholders. The demand comes from the many block-chain loan systems with no working version of collateral which adds risk and makes the idea useless. Also this will work with any erc-721 token so my current idea is to build this to accept all tokens as backing for a loans, i am going to work on it a after aetheria is done.

edit: you could also remove the bank and create another erc-721 (OBLI) which represents the asset (erc-721) in the contract as collateral and money is payed to that OBLI's balance which can be withdrawn by the owner of the OBLI. now you get a loan market where investors can meet borrowers with no need for trust.

Premises: borrowers want to move money from now to the future investors want to move money from the future to now money cannot move in time

Conclusion: borrowers and investors must create some form of OBLIgation/contract between themselves to seemingly move money in time form their perspective.