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Proposals for new districts to be built by the district0x Team.
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0x Loan Consortium - Loan Marketplace #193

Open MCDForm opened 6 years ago

MCDForm commented 6 years ago

Name

0x Loan Consortium - Loan Marketplace

Purpose

Help individuals in the community acquire virtual land, d0x voting stakes, and needed financial resources through crowdfunded loans secured with digital collateral. This district will allow users to use digital assets as collateral for loans, opening a new world of possibilities for borrowers and lenders.

This district will be a marketplace for three types of loans. The first type is a virtual real estate loan (e.g. Decentraland). The second type of loan will allow users to purchase DNT for vote staking and profit sharing, and the third type of loan is a general loan for personal or business projects. Loans will be funded by a group of lenders called a Nebula.

Loans will be analyzed by lenders and the most attractive loans will acquire multiple lenders which results in a lower interest rate. The borrower’s Grade status can also increase or decrease the risk to borrowers resulting in less collateral or down payment required.

These basic loans will provide those with interest in d0x, virtual land or the pursuit of passion projects with the means to enter the space with minimal initial investment. It will also allow individuals with alternative types of capital that they do not wish to part with to leverage it for additional investments.

Description

Real Estate Loan

This loan will allow borrowers to purchase real estate in virtual worlds such as Decentraland with low initial investment.

  1. Requires 20% down payment. The down payment can be in cryptocurrency, digital collectibles, virtual reality real estate, DNT voting stake, or other types of assets.
  2. An 0xWide loan Nebula will purchase the property in the name of a Trust (group of lenders) and a smart contract will transfer ownership of the property when the terms of the loan have been completed.
  3. The borrower will be in possession of the property and voting rights during the repayment process.
  4. In the future, real estate loans in virtual worlds may prove to be the first step for many to a truly enjoyable virtual reality experience. At this time, real estate loans for virtual reality are not in high demand but this district is attempting to secure a first mover advantage in the virtual real estate loan sector.

DNT Vote Staking

This loan will allow borrowers to obtain voting rights and profit share in d0x Districts with low initial investment. This differs from DP#149 in that the borrower is acquiring voting rights and profit share as well as ownership of the DNT.

  1. Requires 20% down payment similar to Real Estate Loan.
  2. An 0xWide loan Nebula will be created that includes the borrower. Smart contracts will be deployed that repay the lenders from the district payouts and from the borrowers wallet. Voting stake will be tied to the borrower only.
  3. When the loan has been satisfied the smart contract will transfer DNT directly to the borrower.
  4. Voting stake loans may also be applied to future organizations that allow voting rights to be acquired in a fashion similar to d0x.

General Loan

This loan allows borrowers to obtain cryptocurrency for use on personal or business projects.

  1. Requires an 80% loan-to-value (LTV) ratio based on borrower collateral. In other words, the borrower must provide allow a lien to be placed on an asset that is worth at least 80% of the amount being borrowed. The lien will be executed in a smart contract.
  2. Collateral can include virtual real estate, staked DNT votes, cryptocurrency, digital collectibles or other types of property with value.

Loan Terms

The loan terms as seen from the funding screen.

Loan Amounts

Loans will have a minimum amount voted on by stakeholders. A maximum amount may or may not be determined.

All loans will be in cryptocurrency only, no fiat allowed. Payments will also be in cryptocurrency only. Down payments may be based in cryptocurrency, virtual land, digital collectibles or other digital assets such as eth domains.

Repayment Terms and Schedule

Loans will be short term in nature, at the genesis of the district, due to the fast moving world of cryptocurrency and virtual reality. Loans will be offered in increments of 7 days, 32 days, 180 days and 360 days.

Payment on a 7 day loan must occur in full on the 8th day after origination. Payments on a 32 day loan occur every 8th day. Payments on a 180 or 360 day loan occur every 30 days.

Interest Rates

The interest rate for each loan depends on two factors, the size of the loan and the number of lenders.

0xWide TC recognizes three sizes of loans based on the amount being borrowed. The sizes are regular, jumbo, and extra jumbo. Regular loans begin with interest rates between 4-6%, jumbo loans are between 5-7% and extra jumbo loans are between 6-9%.

The number of lenders in the Nebula lowers the rate as the total loan amount is spread across a greater number of individuals, mitigating overall risk. A loan with one lender may get a 6% interest rate and the same loan with 20 lenders may receive a 4% rate.

When lending to borrowers in “Junk” status the terms of the interest can be negotiated higher than the default.

Interest is accrued daily and interest rate is for the duration of the loan (not APR). For a 7 day loan the interest is divided over 7 days. For a 360 day loan the interest is divided over 360 days. Each loan will have a payment schedule with indication of principal and interest paid with each payment.

Loan to Value & Down Payments

As stated the default LTV is 80% for loans. The LTV of loans can be reduced if the borrower has achieved a high Grade status as discussed below. The LTV may go as low as 65% for AAA borrowers. A 20% down payment may be reduced to 10% for AAA borrowers. If no lenders fund a loan a borrower may repackage their loan with higher interest rates, LTV and/or down payment.

Borrower Grade

A borrowers district based reputation will be used to calculate their Grade. The highest Grade borrowers will receive AAA status, followed by AA, A, B, and Junk. Receiving a AAA status is rare and reserved for the most trustworthy borrowers.

Fees

0xWide TC loans have low fees due to the decentralized aspect of the district. The district charges a 1.5% origination fee for all loans which includes all transaction fees for the loan contracts.

Fees are also incurred if the terms of the loan are not satisfied by the borrower. If the loan is not satisfied the amount of the remaining loan plus 10% is deducted from the borrower's collateral.

Lenders

How are lenders repaid?

The mechanism for repaying lenders will be determined by the stakeholders. There are currently two options:

  1. The loan is repaid equally to all lenders over the course of the loan.
  2. Lenders are repaid in the order they sign up to lend money.

The first case will likely result in larger nebulas being formed and lower interest loans being originated.

The second case adds a small amount of extra risk to late lenders but provides a reward to early lenders. This lender repayment plan will result in a greater number of single lender loans with higher interest rates.

Marketplace

Borrowers will complete a loan application using a system similar to ethlance. The borrower's loan application will include the loan type, desired amount, the type of collateral/down payment, the duration and a short description of what the loan is for. The collateral or down payment, interest rate, repayment schedule and minimum lender amount will be calculated by the district.

The loan will be posted similar to a job announcement in Ethlance. Lenders can join the Nebula by acquiring the loan. Lenders can choose to fund a full loan or portion of the loan. If the lender funds the full loan the smart contract is executed. If a lender funds a portion of the loan it will be held until the remainder of the loan is acquired.

The lenders will receive payments directly to their wallets on a timeline based upon the length of the loan. A loan that is in default will cause the smart contract to execute the failed loan scenario.

Discussion

The idea behind this proposal is to help those without the capital develop and build projects that may increase their capital growth.

Notes:

  1. Staked DNT may be used as collateral for additional DNT because the borrower may wish to retain voting rights in a district while acquiring additional voting rights.
  2. Loan interest rates can also be voted on by the stakeholders to better track current interest rates.

Eth: Eth: 0x1c63a09C62558B2A614f48e7495291f02f99AC40

shyblugs commented 6 years ago

Fantastic idea what do you think about having a variable collateral rate based on reputation