Summary Banks continuously betray public trust. DeFi is limited to yield farming. Let's empower individuals to lift their community and build their own future. Crypto lending circles are the solution, community powered self lending. No more shady business with banks and no more 100+% collateral on DeFi protocols. This is already helping immigrants and those in developing countries but limited to small amounts due to low income communities. 24.4K for a prototype to scale the pooled money limit and reach users across the world potentially capturing a $6 billion market.
Detailed problem 2.5 Billion adults around the world are unbanked. They are concentrated in developing nations where very little regulation exists for central banks. Paired with corruption, banks engage in predatory lending [1], fraud, and plain abuse[3][4]. In developed nations, the bank's profits model protects profit margins not people. Along with fraud [5], borrowers are tricked into unfair terms [6]. Current DeFi protocols are reduced to yield farming for those with disposable income. Finance is not truly accessible for anyone.
Detailed solution By cooperatively saving and taking turns loaning out the money, members get anything from a low interest loan to a high interest savings account. Known formally as a rotating savings and credit association (ROSCA). The concept has been practiced for decades successfully[7] (used by %23 of Mexico) and is known by 200 different names across the world.Women in Kenya,Mexico, Bangladesh and all over the world successfully use this at the scale of a local community [8][9][10]. Kitty Party will use the Cardano platform to scale this solution to the global stage.
What success looks like Short term (1-2 years):
The ability to provide under collateralized loans (or zero collateral) group lending will attract people outside of the crypto space out of necessity. Bringing new people onto the Cardano platform and keeping them with solutions that solves real world problems. Capturing 1% of the current DeFi lending market yields $67 Million translating to about 70,000 active users.
Long term:
Bringing product to the vulnerable population from developed to underdeveloped nations. With IOHK's involvement in Africa, we would want to provide Kitty Party as a tool for the population. Having non-technical users benefiting from the platform: ie. Dimitri would like to grow his farming operation but needs $30,000 to purchase equipment. He can save $1000 a month for 30 months or join Kitty Party and receive his required funds and kickstart his upgrade earlier.. Make the world a better place. People are able to lift themselves out of hard financial situations or shoot for their dreams with community powered lending.
The road ahead Dealing with fraud and virtual identities:
Each wallet will have to develop credit in the system (ie. cant start off with a $1M stake group). Individuals will build trust starting with low stake groups. Members will also be matched with other that have similar financial needs Using 'Know you customer' (KYC) processes users will only be allowed one wallet which can be blacklisted due to fraudulent behaviour Members will be able to build trust faster if they are able to use cosigners within the same jurisdiction legally binded using OpenLaw.
For Catalyst F5 we are seeking funding to build a prototype ready for alpha testing. Current team size is one and will be utilizing contractors/freelancers for peripheral work. After product market fit has solidified we will continue expansion. Total funds requested: $24,400 estimated for 6 months of development Breakdown:
UX design - $3000 Web application first iteration build - $8000 Smart contract + tokenomics design - $9000 Security review first iteration - $3000 Contingency - $1400
Timeline:
3 months - skeleton of web application and smart contract system built. Ready for internal refinement. 6 months - version 0 ready for closed alpha testing (n=100) With early product validation, seek funding for formal verification and stress testing
Deliverables:
Weekly updates on progress. Forum for consulting community on designs. Web app + smart contract Prototype ready for early access in 6 months
By January 2022 we will have the first round of closed alpha testing.
Experience Technical Co founder for 4 years bringing concept to market. Integration operations lead for national mortgage insurers for 2 years. 7 years of full stack software engineering Currently following plutus pioneer program https://www.linkedin.com/in/qimran-ahmed/
Want to discuss? I can be reached here: https://twitter.com/imran_effect https://discord.gg/qQnbVqmR94
References
www.cgdev.org/blog/does-compartamos-charge-195-interest
www.mckinsey.com/industries/financial-services/our-insights/counting-the-worlds-unbanked
vodenglish.news/predatory-microlenders-abusing-rights-of-poor-borrowers-report-says/
www.nytimes.com/2020/04/08/world/middleeast/microloans-jordan-debt-poverty.htm
https://medium.com/@fundary/tandas-and-the-informal-economy-of-mexico-4f3c80c1c7ce
www.economist.com/banyan/2012/11/02/one-for-the-kitty
www.nytimes.com/2000/10/22/nyregion/new-yorkers-co-newcomers-savings-and-loan.html