As stated in their white paper, the main limitation of the current crypto lending protocols is that they require excessive cryptocurrency collateral, which prevents the vast majority of borrowers in the world from participating.
Including the principle of “trust through consensus”, the Goldfinch protocol gives borrowers the opportunity to demonstrate creditworthiness based on the collective assessment of other participants, and not on the basis of their crypto assets. The analysis of solvency, in this case, is performed by the project sponsors, who are the primary tool for the future borrower to cut off the project.
The key question is what incentives borrowers should have to repay what they borrowed.
The first incentive is that Borrowers will probably want to continue borrowing from Goldfinch. At the moment when they delay payment, Borrowers cannot take out further loans from any pool of borrowers. In addition, sponsors are likely to stop providing additional capital if the Borrower is constantly delaying payments. Customers should determine whether Borrowers really want to continue borrowing from the protocol in the future.
The second incentive is that, since borrowers need to publish their address when offering pools to sponsors, their online history becomes publicly available to future lenders, even offline.
Finally, although this is not explicitly supported by the protocol, sponsors can enter into legal agreements with Borrowers outside the network. Sponsors may require such an agreement to take effect, either with them directly or with another sponsor, in order to be ready for deliveries.
Borrowers need an approving vote of Auditors to receive a loan. Auditors bet on GFI to be elected for voting, and receive GFI remuneration when they vote together with the majority of other auditors, in accordance with the rules described below.
Anyone can be an auditor by placing a minimum amount of GFI and passing a uniqueness check. When a vote is requested, the protocol selects 9 auditors on a random basis, weighted by the amount of GFI they have delivered.
As their mission, they are creating a decentralized credit platform that expands access to financial services.
They believe that there is a huge untapped lending potential in the world. Today, being a bank is expensive, and this limits the range of available lenders. But there are thousands, if not millions, who could lend with the right system. We are creating a platform that allows anyone to become a lender, not just banks.
This is an amazing project with an amazing cryptocurrency future.
website: https://goldfinch.finance/
twitter: https://twitter.com/goldfinch_fi
whitepaper: https://goldfinch.finance/goldfinch_whitepaper.pdf
