Hello Stellar community! One Daijo’s mission is to financially empower people across the world through leading technology. We are submitting the prototype of our lending platform as the first submission for the March 2018 Stellar Build Challenge. (Our second submission is the ICO of our QIN tokens which are used on our lending platform). The prototype is fully functioning and is built on the Stellar testnet. An interactive demo of the prototype can be accessed here: https://www.onedaijo.com/demo/
Utilizing the Stellar chain and alternative credit scoring methods as well as leveraging partnerships with Stellar anchors, we are able to provide affordable credit to the emerging middle class in the Global South and help them build digital credit identities. Our very first target market is the Philippines and hence, this prototype has been built for our Filipino borrowers. We’ll be delivering an oral presentation of the Daijo lending app at the 2018 International Tech4Dev Conference during which we’ll also discuss our reasons for moving to Stellar from Ethereum.
The demo takes the user through what it looks like to apply for a loan the first time and the second time after successful repayment of the first loan. For the purpose of the demo, we’ve disabled the direct bank deposit feature, allowing only cash pickups. Each time someone goes through the loan borrowing process in the demo, the requested loan amount will go to our PH anchor and the PH anchor will send the money back to us, mimicking the repayment flow. User agreements such as Terms of Use are currently being reviewed and will be linked once the review has been completed.
How does it work?
We welcome borrowers without credit history to build their digital credit identity on our platform and access fiat to fiat and crypto to fiat lending services. Borrowers sign up in minutes by providing a few simple information about themselves and are then offered several loan options. These loan options are written by External Risk Assessors (ERAs) who assess the borrowers’ data to stipulate loan terms that they deem appropriate. Once the borrower selects a loan offer, the loan becomes available for lenders to fund. When the loan gets funded, the borrower can select the preferred method for disbursement (e.g. cash pick-up, direct deposit, or bills payment). Upon a successful repayment, QIN tokens are awarded to the borrower.
One Daijo’s unique QIN token reward and penalty system incentivizes good behaviors on the platform, creates a positive feedback loop, and aligns all players’ interests to favor successful repayment of the loan. For example, borrowers are awarded QIN tokens upon repayment, which builds their credit history and increases their borrowing power as larger amounts of QIN tokens are required for larger loans (first loan doesn’t require any QIN). In addition, with successful repayment, QIN tokens posted by the borrower to obtain the loan will be returned to the borrower. (See our second SBC submission post for more details on QIN token mechanism).
Many tokenized lending projects use their own token as a way to transfer money between borrowers and lenders. We, however, have decided to use a more liquid asset XLM as the rail to transfer money between borrowers and lenders.
One Daijo’s P2P lending platform will ultimately have three key players – borrowers, lenders, and ERAs. As a part of our execution strategy, we’ll first onboard a significant number of borrowers and then the lenders and the ERAs. Hence, in this prototype, One Daijo plays the role of both the lender and the ERA.
Key Components & Features:
Key components of this prototype include:
Backend
For our web app version, a set of scalable compute nodes serve a backend API. These backends require a centralized, consistent NoSQL database and Stellar Horizon Servers to interact with the Stellar network to transfer funds. Our backend also makes it seamless for ERAs to participate in the OneDaijo ecosystem. Our ERA backend is setup where people can construct their own ERAs in a low-lift way by implementing the ERA interface. All ERAs receive information from the ERADriver, which is the communication mechanism between the ERAs and the requests that the REST server receives. (more information on this in the ERA section below)
Front-end
Front-end code is written in React with React Router to create a single page app, allowing the user to navigate between sections of the app without having to wait for a server to respond with brand new pages. This will be advantageous for people with slower internet connections because after the first page load, the process of loading of new UI components will be handled completely on the client side.
ERA Interface
One Daijo’s lending platform emphasizes the decentralization of risk assessment, and more broadly, borrowers’ creditworthiness which decides how much borrowers should put up as cryptocollateral, what their interest rates should be, and what their cryptoreward should be conditional on successful repayment of the loan. Unlike many other P2P lending solutions on the blockchain, One Daijo lending platform empowers external parties - ERAs - to answer these three questions.
Our backend is setup where people can construct their own ERAs in a low-lift way by implementing the ERA interface. All ERAs receive information from the ERADriver, which is the communication mechanism between the ERAs and the requests that the REST server receives. For example, upon the initial borrower request, the ERADriver receives a combination of the borrower application and additional borrower information, which it sends to each of the ERAs, sanitizes the output as required to ensure that the range of outputs are reasonable, and then sends the terms of the ERAs back out.
For the demo, we have implemented 4 ERAs, ranging in sophistication from fairly randomized models for {interest rate, probability of default, qin reward, qin collateral} to supervised learning models that were trained in an offline setting using a combination of labeled datasets that we procured. For demo purposes, our ERAs are linked in. However, ultimately, the ERA driver will be a web interface Our ERA interface supports One Daijo platform’s decentralization of risk assessment and provides a “plug-and-play” framework that ERAs can easily implement.
Key features of this prototype include:
- A quick and simple loan application process
- Ability to review multiple loan offers and select the desired loan
- Ability to choose the desired method for receiving the funds
- Direct deposit into bank account
- Google maps integration to enable borrowers to view nearby cash pick-up centers and payment centers and get directions to these locations
- QIN reward and penalty mechanism
- Real time QIN balance dashboard
- Notification at each key step of the loan lifecycle
- Archival of past loans and ability to view the details of each loan
- Friendly and intuitive UI
Borrower High-Level Workflow
Borrowing workflow:
Repayment workflow:
Links
Demo: https://www.onedaijo.com/demo/
Website: https://www.onedaijo.com/
GitHub: https://github.com/OneDaijo
Blog: https://blog.onedaijo.com/
Future Dev Work
We’ll be developing a mobile app version of the lending app, and will add new features including notifications, 2FA, loan offer expiration timeframe, social media profile integration, and direct bills payments.
Acknowledgements
To develop this prototype, we’ve received a lot of support from many people. We would like to thank those who volunteered their time participating in our user interviews that guided our UX design. As always, we are very grateful to our advisors for their support and guidance. We would also like to thank those who provided us with feedback on our lending model and insight on regulatory requirements such as Monetary Authority of Singapore and the Ontario Securities Commission. Last but not least, we would also like to thank people from the Stellar community, in particular Boris and Tunde from Stellar, Ramon from Bloom Solutions, and Andre from clic.world for answering so many questions from us and sharing their wisdom with us.
We look forward to getting the wider Stellar community’s feedback so we can deliver a solution that has positive real-life impact on people’s lives. Thank you in advance!
