How will CashDab incentivise investors/lenders to use our platform? There are two identified concerns which investors may raise before putting funds into our platform, and they are:
1. Investors’ fund deposit protection or insurance.
Investors’ funds are stored in CashDab’s blockchain in ERC20 compliant digital token form which are highly secure and immutable. CashDab does not loan its own proprietary balance sheet funds out, unlike traditional banks which normally lend within their capital adequacy ratios.
CashDab does not provide for insurance protection of investors’ funds at the moment, but we do intend to consider providing loan loss reserves in future, subject to achieving monetary funding milestones. Traditional banks do not provide compensations in periods of business cycle stress if there any loan defaults.
Investors will have full transparency throughout the entire funding process. We intend to keep the user interface as simple and straightforward as possible with clearly stated loan characteristics, borrower credit ratings, loan industry and purpose of loans, and also implement an automated chatbot to help new users. Via our tiered account verification and product access, innovative credit rating process and our continuous efforts to keep informed of the latest industry updates, investors will find the risk reward balance attractive.
We work together with investors hand in hand to ensure they are informed about our products, as well as educating them about the risk and rewards of diversifying their investment capital through CashDab, and informing them of our loan portfolio automation service.
2. How much platform transparency will investors have? For example, will all investors get the optimal return rate for loans while having borrowers with the best credit ratings?
CashDab’s software adopts various economic algorithms, which includes some game theory such as the Nash equilibrium and decision analysis theories. All investors wish to lend at the highest interest rates to borrowers with the best possible credit ratings, so this will be the expected and default choice, and our internal loan matching algorithm ensures a level playing field for all users by considering lenders’ risk aversion levels, amongst other factors.
CashDab will not discredit borrowers unnecessarily to increase their interest rates, instead we will fully disclose all previous borrower activities so that investors will know that they are getting fair and optimised deals.
CashDab’s trustless blockchain architecture will allow investors to lend anonymously and securely, without any kind of discrimination or ostracism. Various loan characteristics, such as borrower credit standing, industry and purpose of loan will all be disclosed. Further details will be published in our upcoming white paper.
This blog post is part of a series of articles leading up to CashDab’s white paper.