I want to tell you about the Goldfinch project — a decentralized credit platform for loans in crypto currency without collateral for their assets. Its main differences from current platforms are that lending decisions are made here not based on the size of the borrower’s current crypto assets, and they are made not by one management unit like a Bank, but by depositors themselves, through a collective assessment of the client’s reliability. By simplifying the procedure for participating in lending and enabling anyone to both invest funds for passive earnings and get a loan, the protocol maximizes the opportunities for obtaining benefits from both sides.
At the moment, there are four categories of participants in the protocol — Borrowers, Sponsors, Liquidity Providers and Auditors. Borrowers are clients who form Pools of Borrowers, offering their payment schedules with interest. Sponsors study the application data, request additional information if necessary, and if they are satisfied with everything, they can contribute their personal capital of the first loss. Liquidity providers contribute their capital to the senior pool for passive income. Auditors are also engaged in evaluating Borrowers during loan approval votes.
How it all works further — when more than 20% of the amount limit is collected in the Pool of Borrowers, the borrower can request an approval vote, and the Auditors will have two days to make a decision. If the majority votes in favor, funds from the senior pool will be automatically added to the junior tranche, if there are many who are not sure, the borrower will only have access to the junior tranche, but if there is more than 1 vote against, the Borrower will be denied.
In order to compensate for the Sponsors ‘ efforts to check the Borrowers and deposit the capital of the first loss, when the Borrower makes payments, 20% of the profit of the senior pool is transferred to the junior pool.
Since decisions are made by consensus in this structure, a lot of checks are carried out, both Borrowers and Sponsors with Auditors, to prevent possible conspiracies with the aim of cheating and making a profit.
In general, this scheme looks very convenient and promising, so the platform has a good future and great potentials.
Good luck and join GoldFinch Flight Academy!