Proud to announce that development of my next service offering to the HIVE community has begun it's development phase. While currently the site isn't far enough along in it's development cycle to allow for online alpha testing the TLD and web server has been set up and another member of the HIVE besides myself has been brought on board the development team in order to help get things rolling faster.
This service is being developed in tandem with my Hive-Roller.com site which is currently the main focus of my own development work, however the addition of an additional development team member on the Hive.Loans project should keep that site's development moving along even when I'm not focused on it.
Without further adieu I present to you what the Hive.Loans project will do and a rough overview of how it will operate it's day to day business. While still a few months minimum until it's ready to start alpha testing the business model and modus operandi have been established and are currently being put into code.
Business Model, Profit Model & Service Overview
The Hive.Loans platform will be a fully automated (HIVE) blockchain based lending platform specializing in providing HIVE capital loans with affordable interest rates (5% - 20%) over medium to long term durations, with the loaned capital being crowd sourced from willing creditors in the community wishing to see a return on their liquid HIVE. If a given potential lender has sufficient collateral in the form of Hive Power(HP) in their account (say a minimum of 150% - 200% above requested loan amount) then they will be given the option to apply for a loan, which will be granted after they have relinquished the private keys to said account containing the collateral. All of the account keys of the user lending the HIVE capital will be changed by the Hive.Loans service prior to the capital being released to the borrower, however they will be provided with both the new posting and active keys, in order to still be able to utilize their account while they are paying off the loan, which will be paid off in weekly payments via HIVE tokens that is automatically triggered into a powered down state when the loan is granted after the borrower has provided their keys and they've been changed over.
In order to qualify for a loan from this service the borrower will have had to set their recovery account to the Hive.Loans account 30 days prior. A guide on how to do this as well as tools provided on the site will make this process painless and the site will also provide account recovery services free of charge.
Those wishing to provide HIVE capital to be lent out will have the ability to specify what the minimum and maximum interests rates they are willing to provide capital at, as well as minimum and maximum duration they'd like to have their capital out on lend before being paid back. The way the Hive.Loans service creates income for itself is to charge a small commission fee in a form of some percentage of interest profits earned (5% - 10%) by the lender. The amount of commission fee percentage paid by the lender for the Hive.Loans service facilitating the lending and ensuring repayments are collected will likely be variable, with those providing large amounts of HIVE capital to be lent out to borrowers gradually paying less in service fees as a reward for their loyalty and continued supplying of HIVE to be loaned out.
Community Lending Pool & Multi-Lender Contracts
While ideally the Hive.Loans service would be able to pair up single lenders and borrowers to fulfill eachothers financial demands if the service was to allow pooling of lenders funds it would in theory be able to provide loans of greater amounts and duration than those of straight peer to peer lending. Lenders will have the option to have their capital added to the community lending pool if they wish, which should increase the rate at which lenders are able to find borrowers to collect interest on repayments from. However this presents challenges such as deciding which lenders get priority to provide capital for loans over others. The obvious solution for this is that the lenders with the lowest minimum interest percentage rates will be queued before those with higher minimum expected interest return rates.
In the event where multiple lenders are used to fill a loan request, the profit made via the interest received when the loan is repaid will be distributed according to what percentage each lender provided to fill the loan, with the sites commission fee being subtracted from the weekly repayment before it goes on to be distributed to lenders according to percentage of capitol provided.
Borrower Account Handling & Defaulted Loan Policy
Due to the nature of an account as collateral lending service the Hive.Loans site will be handling users account credentials and other highly sensitive information quite regularly. Due to this the site will shy away from accepting lenders private keys in raw text form and instead will enforce that all keys be sent via encrypted memo, with the borrower encrypting their full set of private keys with the Hive.Loans keys before sending. Before a borrower is eligible to apply for a loan they must have at least 30 days prior set their recovery account to Hive.Loans in order to ensure that recovery of funds can be done in a timely matter without resistance if for some reason the borrower finds a way to default on the loan by missing payments.
Procuring accounts that have defaulted is not what the service intends to do, in fact this will be avoided at all costs in order to keep the borrowers in the community with their already established accounts. In nearly all situations regardless if the user defaults on their loan they will eventually be given full ownership of their account once the outstanding balance on any active loans they have has been paid off.
Building Use Cases for Hive & Investment Vehicles
One thing that as a developer I've always attempted to do is create applications that have a possibility to attract and maintain new members originating from outside the already established community in order to act as an on ramp into our ecosystem. Without lucrative use cases any crypto currency is merely bytes floating around in the cloud and by providing use cases and investment vehicles it is my hope to attract more and more users into our community. The Hive.Loans service will provide a very lucrative service for a broad range of users, from investor types looking to maximize their return on investment within HIVE to the small time blogger who needs to borrow some capital due to unforeseen expenses popping up.
The HIVE ecosystem is still very much in its infancy, and by developing new innovative services based on the unique abilities of this blockchain we will make ourselves stand out from the hordes of shitcoins currently flooding the markets. Projects like this are true cases of "win / win" and will ultimately be the sort of thing that gets our community noticed by the greater population.
Thank you for checking this post out, more updates will be posted as additional information on the projects development come into fruition. If you'd like to get involved or know more please comment below or get ahold of me in Discord by following the link below in the footer. Have a gooder everyone.
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A great way to support the launch of legit business endeavors on hive.
Yep. Could certainly be a useful tool in order to help small HIVE based businesses succeed.
Great idea, I was thinking about this some time ago, but never got to it.
Yeah man! I'd been sitting on the idea for a few months now but decided to pull the trigger on starting development on it with a buddy. Pretty excited for this to come into reality in the next few months.
That's a long sentence, lol. But I guess the borrower's keys will be changed right? Not that from the lender?
I like the idea of a p2p lending platform for Hive. That's a great usp also for Hive, the more services the better.
But I guess the interest rate won't be sitting at 5%, thanks to the high curation+inflation rewards for having just the HP itself. I guess the interest will be higher than 13%, with fees even more than that.
On another note: I guess I would create an account, fill it up with some HP, take on out a loan to a max. interest rate and than lease it out on dlease. Like a carry trade. 😂
Only those borrowing have to worry about key stuff. Lenders will simply have to log in, deposit and set their interest and duration preferences and the system will do the rest. Then Lenders can just show up once a week or whatever to grab and withdraw their profits.
Interest rates will be lender specified with the lower end looking like 10% and the higher end looking like 30%.
No need to create an account, this service uses hivesigner for logins so you just plop your posting key into it and you should be able to access your stuff.
Jeah I guessed that, but the sentence is implicating something different but okay.
It would love to see an automatic version for that.
Will be interesting to see the rate compared to the curation and dlease. Might be worthwhile to arbitrage that.
For Lenders jeah, but for borrowing I would always create an extra account. The master key has to stay safe.
The borrower will take loan in liquid hive from lender at a rate of 5-20% . The maxed loan amount can be 50% of the staked HP in the borrowers account.
Now u start power down on the account. Then as soon as lender gets back his loaned Hive + all interest till that date - do u return the private keys of the account back to the borrower or what?
Is this all irrespective to change in hive prices or there is link to hive prices somewhere?
All the loans are in HIVE and paid back in the respective amount of HIVE plus the interest agreed upon before the loan. Hive price compared to BTC or any fiat is irrelevant.
Ownership of the account and all keys are returned upon successful repayment of the loan.
Thnx @klye. U should get this service encoded in hive protocol through DHF funding. So that the return of account is guaranteed after the payment of the obligations. As of now - it is on the whims of the lender. Lender may or may not handover the account back to borrower as it is not enforced by base code.
Oh, the lender has no control over the borrowers account. All of that is handled by the hive.loans service. Powerdowns go to the hive.loans account and are then distributed by percentage of capital of the loan supplied back to the lenders.
It would be cool to see this on a chain level, but it's unlikely this will happen.
Likely couldn't get DHF funcing for this as it's closed source to prevent anyone on steem from taking the code and running a similar service.
That's a great idea
Thanks captain!
Oh my this is quite bold. Nice!
Making moves and taking names.. Surprised nobody created this service earlier to be honest!
Now that you say it, looks like a no brainer
I love where this is going .Just let me know how I can help my friend .
Slowly building out services to offer more investment vehicles to our community.
I believe it's imperative to the ongoing success of the blockchain to continue to push the boundaries of the types of services that we offer as a whole. More investment vehicles and use cases for a currency the more likely it is to succeed long term.
Ah, finally a place to finance my gambling addiction. You offer all necessary services for life, thank you klye!
LOL
Once I have this built will own a place for you to gamble.. and a place to finance it with your account as collateral.
Now I just need to find a way to sell pussy and drugs and I'll basically be the HIVE mob. :D
Lending and banking idea is a great on this platform. It will attract more investor and fascinate existing Hiveans. We would love to use Hive.loan project. Wish you all the best @kyle
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Thank you for the feedback captain!
I'd been developing this idea for a while but was unable to push it forward due to not having enough time in the day to continue developing Hive-Roller.com and this project in tandem. Found a very talented coder in our community who was willing to come help me develop this idea into a working project so a few days ago begun turning the business model into a reality.
As far as I know nothing like this exists in the crypto ecosystem and this is the first of it's kind. Will be very interesting to see how the HIVE community and the crypto community as a whole react to this new type of lending platform.
Cheers!
Yes, this is why I like your idea. It will make this platforn hotcake for investor and user. Keep it up your good work. Wish you all the best.
We just started a community name gitplait to encourage people who are involved in coding, technology related tutorial. I hope our polatform will grow and help brilliant programmer to make this community great.
Got a link to the community? as a programmer myself I'm always looking to see what others are doing as well as possibly recruit folks to help with projects.
Cheers man!
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Thanks man.
Awesome idea :) automating all of this sounds like a lot of work :D
Removing the human element of a service like this will certainly cause the initial development load to increase.. But will also remove the human weakness aspect of the service as well. Code is not suseptible to social engineering and as such is likely safer than having people working to sift through loan applications.
The inspiration for this service honestly came from @neoxian after he provided countless loans to me working under the same type of account as collateral guidelines. Figured it would be possible to automate the whole process and open up the lending pool to the entire community so we could all supply loans to those in need with sufficient collateral.
Thank you for the feedback and the vote man!
I love the idea of a P2P lending platform here on HIVE. I was very active in the early days of Prosper with P2P lending before things got stupid with the SEC here in the US.
I have a couple of questions/suggestions:
regarding the interest rate on the loan, why not do what Prosper did early on with reverse auction style lending. For instance, the individual applying for the loan specifies amount and interest they are willing to pay. Lenders can fund a portion of the loan (or the entire loan) until it becomes fully funded. Once fully funded, lenders can bid to fund as well, but at a lower interest rate than the rate which has been fully funded. This would allow those looking for loans to allow the free market to provide them with the absolute best rate. This is what made Prosper so incredible initially.
Will all loans be secure loans, or will unsecure loans be part of the product offering?
What tools will be provided to the lenders to determine creditworthiness/assess risk of the individual?
Will a secondary market exist where loans can be sold to other individuals willing to purchase them at a discount to the face (much like Prosper and some larger institutions)?
Will the core functionality be handled by smart contracts or will this be a hybrid centralized function?
I'd love to learn more about this, as P2P lending was something I did for a number of years through Prosper. Very excited about this Klye.
Hey man. Thanks for your input and comments!
The interest rates will consist of two different pools, lenders and borrowers that will be able to post their preferred interest rate and open up a fill order of sorts.. The site will then match up those that can help each-other fulfill these orders. Free market will rule but there will be a cap on how low and high interest rates can be set at.
All loans at this time are planned to be secured and basically riskless due to the method we're implementing with the account as collateral system. Unsecured loans is something I've thought about however I don't want to facilitate people scamming lenders.
As for tools to determine how "risky" a borrower is I was thinking of having some sort of points or ranking system based off of previous loans being repayed as well as looking at the reputation reanking built in to HIVE.. Finally a use case for the reputation system on the network. Although the way it's being set up there should be zero chance of borrowers going AWOL or defaulting.
I'd not considered offering a second market up until you've mentioned it now. It could be an interesting addition to the business model for sure, will have to think about how to go about this, never used Prosper.
The site will run almost entirely auto-magically. The goal is to create an automated hub to link lenders and borrowers while mitigating the classical risk of lending. While the term smart contract generally pertains to systems programmed right into a chain itself we'll be handling it mostly with our own software, that will tie into the chain but as it sits I don't know if it's possible to do a classical smart contract on HIVE.
Like any project as we get it built up to the point where it becomes operational and we offer it up for alpha testing by the community I'm almost sure tweaks to the system will be implemented.
The biggest goal about this platform in my eyes is trying to make it trustless and riskless. Due to the service taking ownership of the borrowers account keys it should be possible, although this also means certain steps will have to be performed by borrowers to be whitelisted to receive loans.
Super excited for this project
I will be someone who will use Hive.loans
Right on man!
We're working on it right now.
One stipulation before users can request loans is that the recovery account of the user be signed over to the @hive.loans account 30 days before requesting a loan. This ensures that nobody can break the account as collateral contract.
The site will have a free to use automated account recovery service available to everyone. Which is helpful because many users here on HIVE still have the steem account as their recovery contact.
Currently thinking about another method that does not involve the 30 day recovery account signing to @hive.loans as well. We'll see which one is more secure and go with that.
Thanks for explaining and good luck with @hive.loans
If I can do anything then please feel free to ask me after 1st July via Twitter or Here on Hive
Thanks for the offer of help. Will let you know!
What a great news, I love this innovation but I have two questions to ask.
will other projects leaders be able to rent HP to help their various project too.
What about if the price of hive has increased exponentially before the day to complete payment. Will it be in ratio of the number of lend hive to their number or in the price worth when it's lend.
We're going to only be dealing in liquid HIVE. A number of other services already exist filling the niche of renting out HP delegations so we'll not be stepping on their toes offering already existing services.
The price of HIVE will have no effect on loans or repayment amounts. Hive capital is paid back with Hive capital, price is irrelevant to the service. :)
That's good, as long as it's not in the price but in capital given.
pls can you tell me some of the project renting out HP got a project on ground i would love to rent some.
I know blocktrades.us use to rent HP delegations..
And I think a service called dlease.io use to as well?
Thanks
Interesting idea for sure. It would definitely something I would set up a separate loan account for. Not giving up the keys to my personal account though.
Interesting concept having a loan account.
One of the reasons this business model works is that people with established accounts with HP in them generally are quite attached to them, meaning they actually value them and will be less likely to forfeit their account due to trying to default on a loan.