A Credit Union called Union

What if we just trust that people will pay us back?

Introduction

In order to access credit, currently you have to deposit between 133% — 150% of the value you intend to borrow. This works fine, if you are already crypto rich, or for speculative use cases like leverage or shorting an asset, but it’s not very capital efficient.

So I propose a design for a credit union on the blockchain. In which members stake funds. Receive token shares on a bonding curve, the Union Contract receives Interest, and that interest is then lent out unsecured or under-collateralized.

Major Components

It consists of:

1) A DAO, let’s call it Union, that is responsible for creating and managing credit vehicles, include setting rates and membership conditions.

2) A Staking Mechanism that takes in DAI or similar asset and then for a period of time deposits it into a yield generating protocol like meta’s maxDAI and deposits the U. In return emits a UnionToken.

3)The Lending pool holds the DAO’s funds to be lent out. It also tracks funds as they are paid back to ensure that the DAO only ever pays a dividend when it’s profitable.