The idea is simple and powerful. Real world companies get crypto loans with off-chain assets, income and reputation.
How it works: Any company can apply for a loan. A random group of 9 auditors are selected to audit the application. If accepted, the company can start accepting loans. if the company repays their loans duly, it increases their trustworthiness and they can take more loans.
Goldfinch has a few protocols in place to prevent malicious borrowers, lenders, backers and auditors. They're pretty basic. Auditors need to do KYC, stake collateral and they're randomly selected.
They're starting off with 14 fintech borrowers with a proven track record. I think that's a smart choice that will make their early phase a lot easier. That's why they have 0 losses so far. They can expand to include riskier borrowers when their protocol is more tested and developed.
They seem to be focused on big finance organisations in developing markets who are interested in 1-30 million USD loans. Those are often too big for local lenders, but too small for big western lenders. They are very trust worthy and can benefit from getting these loans easily through crypto. The lenders on the other hand can benefit from high yields and credible borrowers. Personally I think it's a great niche with very big potential.
Here are some concerns:
- I think the quality of auditors will be very important, but there's no mention on how they ensure high quality auditors.
- In this video the CEO says all loans are collateralized with off chain assets, but they don't explain in the whitepaper how that works. I couldn't find any mention of collateral in the whitepaper:
- There's no mention of the token utility in the whitepaper and I don't understand its utility or any clear drivers for demand. Show Less
