Introduces Decentralized P2P Lending

By Guglielmo de Stefano on Friday 30 October 2015

Alternative Lending

Outlier Ventures Ltd launches, a decentralised peer-to-peer lending app that allow people to mimic credit unions. 


Europe’s first dedicated blockchain incubator Outlier Ventures Ltd today has released the first public proof-of-concept of a new decentralised peer-to-peer lending platform called The app will allow people to lend and borrow money, in the form of fiat pegged crypto-currencies, from and to groups of other people without the need for the intervention of a third party.


According to MoneyCircle, the idea follows on from careful analysis that reveals access to affordable credit facilities has become extremely difficult. In the UK alone, there are more than 6 million people who are perpetually indebted and 9 million who have no deposit account. MoneyCircle asserts that half of the households in the world that have no access to credit at all. 


MoneyCircle considers itself as the ultimate solution to these problems, basing its offering on social lending and fair rates. The platform, built on Uphold (formerly Bitreserve) blockchain and API, enables its users to mimic a credit union through the deployment of Ethereum smart contracts, contracts created by users without the presence of a middleman. In other words, the platform allows users to access credit or to employ their extra funds only to selected groups of people. The functioning of this product aims to be straightforward and it is based on just a few basic principles.


Finding Circles: It is not the platform that matches lenders and borrowers. Instead, it’s up to each user to find and join the group of people that best suits their needs. Circles may be selected based on location, purpose, members’ profession and the like. Additionally, if users do not find their perfect match, they are allowed to create new circles, becoming administrators. 


Lending: Currency must be converted into “cloud money” through Uphold and stored in a cloud account. Only then can money be committed to circles of people. Users are allowed to choose the amount and the commitment period. 


Borrowing: Once users become members of a circle, they can request a loan up to a certain threshold, dubbed their Credit Limit, which is determined by a combination of a Circle Credit Cap and a Trust Score. The latter is based on an openly available scale and indicates good credit behaviour within a circle. Taking out a loan is possible only up to the Credit Limit. 
Repayments: Benefits and risks are shared between all members of a circle. When savers commit money to a circle, it goes to the shared circle balance. Loans are taken out of the circle balance, and repaid to the circle. When loans are repaid on time, all members benefit, because the circle will be able to pay out dividends. If a loan defaults, all members share the risk, because the defaults will affect the circle balance. 

Outlier Ventures Ltd is a European blockchain incubator setup by investor and entrepreneur Jamie Burke. The outfit is committed to seed, develop and launch a new start-up every 3-6 months. Jamie Burke, commented: 


"The POC demonstrates how smart contracts on a blockchain can add value to a financial application, with centralised and decentralised components each having their merits. We have gained great insights while building it, which we are excited to apply in the further development of and other proof of concepts in the near future."


From this new proof-of-concept, Outlier Ventures’ goal is to launch a product that shares all the positive features of a standard P2P lending platform – lower borrower rates, high-yielding returns for lenders, less focus on the traditional branch model – but introducing further innovation, such as a greater emphasis on the social aspect of the process.


MoneyCircle is a unique variety of entrant. The platform’s proof-of-conept phase will likely give us a good idea as to whether the model has legs. 

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