1. What commissions does EthicHub charge and what interest do the borrowers pay?
Third parties fees in EthicHub network total 7%; a majority of it (about 4%) belonging to Ethic Partner/Project Collector’s commissions; approximately 1.5% to increase investors recruiting (although cost will be much higher on first years); the rest of it is used to cover platform’s development and general costs as well as Institutional Investments recruitment costs. In the future rates may be adjusted since LendingDev is a non-profit organization.
In addition there will be an Exchange commission charged for each conversion according to supply and demand law, choosing each time the Exchange that offers the best conditions. 2% will be approximate cost for borrower.
To overcome investors’ hesitation to such an innovative product and to compensate for exchange rate risk, we need to offer a net profitability of about 15% (before exchange rate risk).
All in all, effective interest supported by borrowers for annual loans amounts to about 27%. Currently this same borrower profile, if able to get credit at all, is supporting interest rates above 100%.
2. Is there a minimum and / or maximum amount for the loans?
At the beginning, and since the initial development and promotion will have a significant cost, we will focus on loans between € 1,000 and € 2,000 per person, aimed at small farmers in Chiapas, Mexico, choosing this area due to our previously attained know-how relative to how to obtain minimum rates of default in these communities and it meets the objective of facilitating credit access to unbanked people, in addition to being projects with a positive impact.
3. How can I contribute my bit to make this project successful?
Participating in our Telegram and Rocketchat to give us feedback with your valuable opinion. It would be very useful to help us spread the project by word of mouth. Of course, you can also contribute even if you only buy symbolic amounts of tokens in the Pre-Sale! Finally, if you want to get even more involved, we are happy to receive collaboration proposals. This is a project with infinite potential and we are going to need lots of hands and lots of heads!
4. How are we different from similar projects?
We are the only platform that charges commissions only in case of success, that is, once the loan has been paid. We believe that no one should benefit from an unpaid loan.
Our strategy to capture and evaluate projects is based on people. At EthicHub, Ethic Partners/Project Collectors are people linked to the community they serve. They benefit directly from maintaining and increasing their good reputation based on the accurate valuation of the projects they select. Ethics Partners also generate another competitive advantage: they are the best way to identify users (probably the greatest problem of decentralized P2P loan platforms, since it is impossible to validate the existence, nor moral quality of someone asking for a micro-loan from across the world).
SaltLending is focused on token guaranteed loans, so it will remain a niche project until an important economy’s tokenization process is generated. Its borrowers are already banked.
Eth-lend also had this approach but it seems they have pivoted to allow unsecured loans, perhaps considering the above. They have a very interesting point: to issue a generated according payment history cryptocurrency; ownership of it allows you to apply for unsecured loans in regard of such cryptocurrency amount. Their system therefore presents a roadmap to future unsecured loans, but with a long-term scalability. Their borrowers are already banked.
Everex is a project based on remittance transfers between countries, although it also has microcredit functionality. As ETHLend it shares the concept of a currency representing user’s reputation but with a trade approach that could lead to allow someone in bad faith to buy good reputation.
Our main differentiation on Dharma is its macroeconomic approach based on rating providers to value the loans. Our microeconomic approach is based on the fact that a personal approach to evaluate a small farmer in the other part of the world is better than one based on data. It does not intend to launch an ICO to finance the project so the system and its diffusion will take longer to develop.
Although Micromoney is neither a crowdlending platform nor a decentralized system, it offers credits to unbanked users, at very short terms and very fast, with very high interest. Its machine learning based scoring system gets around 26% default against our system’s 3%, and their loans cost between 100% and 400% per year compared to 25-50% we can offer.
Bitbond is a non-decentralized transnational crowdlending platform based on Bitcoin loans. Unlike us, their target clients are not unbanked people. It competes in improving interest rates solvent people pay.
Kiva offers credit through NGOs and other local agencies in developing countries. Since they don’t use cryptocurrencies and due to their project capture channel cost, borrowers pay same or even higher rates than in our system, but without offering investors’ profitability; Kiva lender’s motivation is to make a positive contribution to the world, not to make money. EthicHub balances both for having even greater impact, since offering good returns to investors can potentially redirect even more money to those 2 billion people.