GES DeFi and P2P Lending without collateral
Due to the effects of the Covid-19 epidemic, the growth index of Fintech firms is slowing down. But the digital money market has exploded with a new trend called DeFi (Decentralized Finance). This trend has great potential because with a market of 1.7 billion people unbanked, DeFi Dapps help them access financial products easily with just a smartphone.
DeFi is primarily developed in areas such as decentralized exchanges, insurance, derivatives, fund management and peer-to-peer lending. In particular, loan services are the strongest development, helping DeFi to have a total market capitalization of up to $15 billion. In November 2019, the number was 211 million USD. So, what are the characteristics of the P2P Lending service based on DeFi technology? How to apply them in the crypto market?
Currently, there are many P2P Lending service providers in the market. But that’s actually not P2P lending. Because the intermediary system of these providers only connects with borrowers and lenders on the basis of exchanging different digital currencies in the form of: First, the borrower must pay the lender an interest amount determined by the program; Second, pay an intermediary fee for the feeder and coupling system; Third, the rate of loan is based on the value of the digital currency swap is guaranteed by a certain percentage (70-80% of the assets are collateralized in listed tokens and there is a transaction or coin top such as BTC, ETH …); Fourth, the lender is entitled to sell all of these collateral if the loan period expires, the borrower cannot repay the tokens to receive, or the asset value (the swapped digital currency) decreases (nearly equal to the value of the loan plus the fees to recover capital).
This form is not different from lending assets pledged with tokens or buying securities using margin leverage. If the asset value falls deeply, the securities company has the right to sell all the securities to pay the loan. On the other hand, P2P on digital money platform does not have the most important feature for P2P Lending Fintech technology, which is the form of eKYC (electronic identity identification) to verify borrowers, lenders and scoring. That is why the lender always has the first advantage in terms of investment return.
Grasping all of these factors, defining its strategic vision to become a decentralized payment platform provider applied in many ecosystems, GESGROUP chooses to go differently than the current platforms. Applying DeFi on the basis of combining blockchain technology with Fintech AI technology in P2P financial services in different countries. More specifically, GES is using this technology for partners operating the P2P Lending service in the countries in the form of trust. That is, the borrower no longer has to give collateral to the lender or the system to “pledge” but only needs to use eKYC technology users through multi-index AI technology to evaluate credit scores (scoring) the most accurate before executing client needs matching.
With this approach, GESGROUP will take advantage of both the DeFi platform for digital currencies and for the local market of each country, where the need to access capital from direct capital is increasing. According to the statistics, Total value of locked amounts of P2P Lending in the DeFi sector has reached $4 billion. At the same time, only using DeFi technology based on smartcontract protocol conditionally without having to use the digital currency GES Token in peer-to-peer lending transactions in host countries, there are other advantages. Because, it’s adapted to the legal regulations of the host countries, where cryptocurrencies are not fully accepted or even considered illegal.
It is expected that GES’s partner in the Southeast Asian market will launch a P2P lending platform in September 2020 and a reform from new technology compared to the centralized disbursement technology.
According to CyberMedia