Why Decentr’s Zero-Collateralisation Paradigm Means the End of Trade Finance

Zero-Collateralisation: The End of Trade Finance?

Where DeFI Stands

The market for personal loans and peer-to-peer (P2P) loans has enormous potential and, according to Allied Research, is projected to grow at an explosive Compound Annual Growth Rate (CAGR) of 29.7% with the total market expected to reach $558.91 billion dollars in the coming years, with the Total Value Locked (USD) in DeFi in August at $5 billion dollars.

Fig. 1 Total Value Locked (USD) in DeFi

But this only represents a fraction of the potential of the fully realised DeFi loans market that Decentr is aiming to exploit.

Decentr: What DeFI is Really Capable of

As DeFi currently stands, the biggest drawback is that loans need to over-collateralise. This becomes extremely difficult when an individual or business (let alone a commercial bank, multinational, etc) is looking to borrow large sums of money, or when the borrower simply does not have the necessary collateral.

However, when unsecured or under-collateralised crypto-loans become widely available, we predict DeFi will eviscerate traditional finance and dramatically expand the global lending market.

This will not only improve the lives of millions but massively stimulate supply and demand as well as creating opportunities in research, science and the arts not seen since the scientific revolution and the Enlightenment while releasing previously untapped resources, both human and material, to create hitherto unheard of new businesses, markets and even industries.

How We’re Doing it

Decentr aims to supercharge the DeFi movement by creating a new, more flexible and all-encompassing type of loan function, called dLoans.

dLoans allow users to borrow against the Decentr investing pool, which is comprised of DEC loaned out by users.

Users loan out DEC from their dWallets at an aggregate system APR; however, this DEC achieves higher APR for those users who have earned a high, what we call “Personal Data Value”, or “PDV”.

dLoans is unique in that it requires under- or zero capitalisation for users to take out a loan, pursuant to a high PDV — PDV, being in effect a “reputation score”, is the method by which dLoan’s are risk scored on Decentr.

For a user who achieves what we term “majority affordability”, at PDV 1.0001 (where 1 DEC assumes USD $1 for ease of calculation), the assumption is that both ID verification and/or data generation, reuse and exchange is of such a high, sustainable and community beneficial quality and veracity that a dLoan requires zero capitalisation.

Fig. 2 Total Value Locked (USD) in Aave
Fig. 3 Total Value Locked (USD) in Compound

Why dLoans is Uniquely Scalable

The dLoans feature, underpinned by the radically-new causal tokenomics common to DEC/Deconomics, is uniquely scalable in a way that current DeFI loans are not, restricted either by the constricting demands of over-collateralisation or the inability to ensure repayments from under- or zero collateralised borrowers.

Moreover, the fact that dLoans actually get cheaper over time, in part due to the data as expressed in regular repayments, but also other user-generated data, encourages users to not only abide by their repayments but also to continue contributing increasingly structured and refined data to the decosystem.

Ultimately, as the dLoan feature has demonstrated, the future of finance is not about “money” (fiat or digital) per se but is about encouraging the increasingly structured and refined, generation reuse and exchange of data in order to leverage this data against increasingly cheaper and more sustainable resources. These resources in turn create improved products and services that more and more people have access to and benefit from — irrespective of their economic, banking or documentation situation.



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Your data is value. Decentr makes your data payable and tradeable online. Decentr.net Medium.com https://rich-james.medium.com/ t.me/DecentrNet