Karma Fees From The First Deals
Dear friends,
We have been asked many times about the KRM token utility and how Karma platform is going to feed itself with the fees from the deals? Here's an example and explanation of KRM turnaround.
A company issues a credit request on Karma Platform — a small fee of 7–10 KRM is paid to the blockchain maintenance — this goes to the active witnesses who sign and validate blocks.
After the offer is created, another party (an investor) will be charged with 5–7 KRM for the credit deal creation which also goes to the witnesses.
There are two general approaches to draw the commissions:
1) Immediate: when investor transfers his amount of money, the borrower receives less amount. E.g. the commission can be charged at the very beginning of the loan process.
2) Gradual: the commission is charged from every monthly repayment. That's more fair because it motivates all the deal participants to support the deal until the borrower will repay all the loan.
Now there are different practices at the financial markets: sometimes people use the immediate commissions for some services (like loan origination in US, for example), sometimes they prefer gradual ones (like inrurance in Russia).
All the commissions are transferred to the special karma-commission wallet, and then distributed to all of the deal participants. There are two types of participants at the moment:
- Karma as a platform;
- Referral partner (who've invited the borrower and the lender).
First deals had 21–25% credit rate and the size is 20M RUB (about 350k USD). One off payment for credit issue for the management team is 2% which results in 400k RUB (~6.5k USD). Plus, about 200k RUB (~3.5k USD) have been paid by borrowers as a monthly payments. Karma as a platform have 15% from the investors' profit, so it's about 90k RUB (~1.6k USD).
From current 3 deals for the the first month 127k KRM has been converted from RUB fees and then transferred to the karma-commission wallet: https://explorer.karma.red/#/accounts/1.2.3105
Those commission tokens are accumulated and may be spent for the further ecosystem development.
Our plans for the 2018 year is to increase the volume of credit deals up to 16 mln. USD which will net 3 mln. USD income for the lenders. Karma platform, as an agent for these deals, will earn 300–500k USD in fees, which will be then converted to KRM tokens.
The next step is to automate the conversion process, and while we're developing and testing the software, we will process the fees manually. Also we will integrate more commissions for the new ecosystem roles: insurers, portfolio managers, servicing companies and more.
Cheers
^_^
