Investing or loaning to small/medium businesses (SMEs) in traditional financial markets can be risky. That is because smaller businesses are often much less stable than larger companies and are more likely to experience financial difficulties and may even go out of business. Couple that with investing in emerging markets and adding the potential volatility of using crypto, the risk can be even greater.
However, despite the risks, Zoth are bravely forging ahead by creating a platform in which institutions or approved individuals can lend to SMEs by locking up their stablecoins (USDC) for 90-180 days in return for APYs ranging from 5-20%. I was worried about how they would ensure the legitimacy of borrowers and was relieved to see they do due diligence checks and borrowers need to submit collateral assets to the Zoth platform as well as stake a certain number of Zoth tokens.
I think the ethos behind the project are great as they state they want to make finance fairer. However, my 3 starts for now are because of the risk involved and also a worry about why the latest pool that has been open for a few days has no investment in it when the other two pools sold out quickly? Show Less
