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/biz/ - Business & Finance

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52922259 No.52922259 [Reply] [Original]

Can blockchain be used to fascilitate lending? I'm new to crypto, but I wonder if this is possible or already exists. The two major functions of commercial banks are maintaining legers, which blockchain already does better, and lending money. Is there a blockchain which is able to track debt to income, credit history, etc. of individuals and institutions to determine loan amounts they qualify for? If such a cryptocurrency existed, in buying it you would agree to loan your holdings to qualified borrowers at interest. This is essentially what you do when you put money in a bank, but there would be no bank or exchange fascilitating lending activities. Am I onto something, or does this already exist?

>> No.52922350

>>52922259
AAVE

>> No.52922448

>>52922259
>>52922259
>Decentralized lending
Yes there are plenty
>track debt to income, credit history, etc.
no, there is currently no way securely uploading that to the blockchain. as a result all crypto loans are overcollateralized

>> No.52922501

>>52922448
It would only track credit history, debt to income, etc. within the blockchain. It wouldn't look at fiat debt/income, credit history, or other cryptos. You would essentially build a reputation as a qualified borrower for that cryptocurrency. I know this is wrought with potential problems, but I think a sufficiently sophisticated algorithm for managing risk across all lending activities could be found. If one borrower defaults, it's not a systemic problem as long as aggragate risk is managed.

>> No.52922922

>>52922259
You can lend your keys without a middle man to anyone you trust

>> No.52923066

a system where you can default and be in profit would never work in crypto. there would be far too many ways to game the system and drain the projects lending found. what would you do if someone did? what would you do if someone did screw you over, tank there crypto credit score? they'd just make another burner wallet and do it again

>> No.52923074

Hey faggot check out SMARTCREDIT.IO

>> No.52923400

>>52922259
Blockchain means everything is public. You wouldn't want you income, credit history and all that public right anon?

>> No.52923628

>>52923066
The algorithm could ensure minimal systemic risk. Even if people tried to game the system, they would pay more in interest in the process of building trust than they could ever default on.

>> No.52923704

collaterized loans in defi are done all the time, see aave

but how do you decentralize uncollaterized loans? what do you put in a smart contract that forces the borrower to repay the loan if not collateral?

>> No.52924455

>>52923704
Same incentive as fiat credit: credit worthiness is determined by payment history. The more trust you build in the system over time, the more credit is available to you.

>> No.52924522

>>52924455
It is a possible future we could see but I think kicking it off from nothing is difficult. kickstarting from already existing traditional trust assurances seems like the route that people find the most appealing but it is also difficult. I do think you are right that defi will eventually expand into it though

>> No.52924540

>>52924522
If you want to kill the monetary/financial system, this is how you would do it.

>> No.52924631

>>52923628
> they would pay more in interest in the process of building trust than they could ever default on.
so the amount I could barrow would always be lower then what I paid in interest? why would I ever use that platform and not just keep my money?

>> No.52924720

>>52922259
Only in currencies with a tail emission of some sort. For loans to work the money supply has to inflate; it doesn't need to inflate to the tune of 20 trillion over the course of a decade, but the money to pay back the loan + interest has to be printed/mined/dug out of the ground/whatever.

>> No.52924781

>>52922259
The platform would have to be in compliance with a bunch of jewish banking rules otherwise the debt could just be thrown out as illegitimate in court. Debt has to remain legitimate so it can impact the borrower's good goy score and be sent to collections in the event of default.

>> No.52925153

>>52922501
>but I think a sufficiently sophisticated algorithm
handwaving righ out yo ASS you should be a math teacher

>> No.52925181

>>52922448
Take loans on aave and maker to build your defi credit score though.

Undercollateralized loans are coming. Spectral is where you can check your defi credit score. Right now I have a 610. So pretty low

>> No.52925209

>>52923628
>building trust
Then why the fuck do you want to use a trustless ledger. That's the whole point of blockchains.

>> No.52925533
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52925533

TruFi will never recover from lending to Alameda

>> No.52925646
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52925646

>>52925533
I don't feel so good tru-bros

>> No.52926004 [DELETED] 

>>52923400
It's not public with private wallets like Railway.

>> No.52926166

>>52923400
Blockchain is public, yes. But you don't have income, balance or transactions public with private wallets such as Railway.

>> No.52927159

>>52926166
Quite interesting how clear the privacy gap in the blockchain is getting