Crowd Lending vs. Crowd Funding

[Pheonike]

Oh for those not technical into the code yet:

It seems to be possible that anyone can create a vesting balance for any account.

Code: [Select]

get_prototype_operation vesting_balance_create_operation
[
  32,{
    "fee": {
      "amount": 0,
      "asset_id": "1.3.0"
    },
    "creator": "1.2.0",
    "owner": "1.2.0",
    "amount": {
      "amount": 0,
      "asset_id": "1.3.0"
    },
    "policy": [
      0,{
        "begin_timestamp": "1970-01-01T00:00:00",
        "vesting_cliff_seconds": 0,
        "vesting_duration_seconds": 0
      }
    ]
  }
]

That means that you can sell a specific kind of bond already:
* non transferable
* fixed 'interest rate' on a UIA (e.g. MKR)
* one out of two policies (cdd and linear cliff)
* pre-paid vesting balance

More:
http://docs.bitshares.eu/bitshares/user/vesting.html

Not sure if that makes sense to anyone, but we could have something like this today:

* user pays x USD to an account bond-issuer
* bond-issuer issues x * 1.10 IOU.USD and puts them into a vesting balance for the user
* the user can claim his IOU.USD linearily over one year
* user can exchange it back into real USD in the market or via the issuer

Get the idea?
Possible today!

That's quite similar to what i proposed here   https://bitsharestalk.org/index.php/topic,21808.0.html except for going into fiat and back.

[Empirical1.2]

We have decided to hold the fundraiser exclusively in BTC, there won't be a BTS or bitAsset option. The reasons are that the liquidity between BTS and BTC is so low that selling 130k USD worth opf BTS into BTC to cash out into fiat would according to our calculations move the market simply too much.

BitSapphire cited liquidity, but when they talk about moving the market they mean they would significantly reduce the short term value of BTS if they crowdfunded in BTS & then converted it to BTC/Fiat for their needs.

He came up with a trivial solution: raise funds in asset which he can easily cash out. No conversion is required. Same solution is good for crowd lending.

Yes provided the loan is raised in BTC/other then it is fine but large loans raised in BTS/SmartCoins would put significant downward pressure on the BTS price.

[yvv]

In other words, instead of institutions lending money to unaccountable consumers,
we have consumers lending money to accountable institutions.

And then these accountable institutions can re-lend these money to other unaccountable consumers, but at higher interest. I like this business.

[xeroc]

Oh for those not technical into the code yet:

It seems to be possible that anyone can create a vesting balance for any account.

Code: [Select]

get_prototype_operation vesting_balance_create_operation
[
  32,{
    "fee": {
      "amount": 0,
      "asset_id": "1.3.0"
    },
    "creator": "1.2.0",
    "owner": "1.2.0",
    "amount": {
      "amount": 0,
      "asset_id": "1.3.0"
    },
    "policy": [
      0,{
        "begin_timestamp": "1970-01-01T00:00:00",
        "vesting_cliff_seconds": 0,
        "vesting_duration_seconds": 0
      }
    ]
  }
]

That means that you can sell a specific kind of bond already:
* non transferable
* fixed 'interest rate' on a UIA (e.g. MKR)
* one out of two policies (cdd and linear cliff)
* pre-paid vesting balance

More:
http://docs.bitshares.eu/bitshares/user/vesting.html

Not sure if that makes sense to anyone, but we could have something like this today:

* user pays x USD to an account bond-issuer
* bond-issuer issues x * 1.10 IOU.USD and puts them into a vesting balance for the user
* the user can claim his IOU.USD linearily over one year
* user can exchange it back into real USD in the market or via the issuer

Get the idea?
Possible today!

[yvv]

We have decided to hold the fundraiser exclusively in BTC, there won't be a BTS or bitAsset option. The reasons are that the liquidity between BTS and BTC is so low that selling 130k USD worth opf BTS into BTC to cash out into fiat would according to our calculations move the market simply too much.

BitSapphire cited liquidity, but when they talk about moving the market they mean they would significantly reduce the short term value of BTS if they crowdfunded in BTS & then converted it to BTC/Fiat for their needs.

He came up with a trivial solution: raise funds in asset which he can easily cash out. No conversion is required. Same solution is good for crowd lending.

[infovortice2013]

[Empirical1.2]

We've been mostly talking about counter party free bonds and counter party stocks, but we could also offer some interesting other products using UIA's.

Of course these are only as interesting as the trustworthy ability to pay interest by serious institutions and startups, but you could offer CD's and annuity bonds backed by quality UIA's.

The issuer sells a transferrable bond denominated in their UIA which locks up the principle + interest in one of two ways:

Certificate of Deposit (CD) which pays interest and principle at the end of its term (90 days, 1 year, 10 years...)
Annuity Bond (AB) which pays interest and principle as a series of periodic payments as an income stream.

In other words, instead of institutions lending money to unaccountable consumers,
we have consumers lending money to accountable institutions.

Now we just need issuers who can convince buyers they are a good risk over that period of time...

This might be called "crowd lending"

It's certainly doable and we've already seen some small examples of micro-lending on the BTS blockchain  https://bitsharestalk.org/index.php/topic,20530.0.html

However like crowd-funding, large crowd-lending loans may have a negative short to medium term BTS price effect because the borrower would convert the large loaned amount into fiat/BTC creating significant BTS sell pressure which would only be returned slowly after varying periods.

We have decided to hold the fundraiser exclusively in BTC, there won't be a BTS or bitAsset option. The reasons are that the liquidity between BTS and BTC is so low that selling 130k USD worth opf BTS into BTC to cash out into fiat would according to our calculations move the market simply too much.

BitSapphire cited liquidity, but when they talk about moving the market they mean they would significantly reduce the short term value of BTS if they crowdfunded in BTS & then converted it to BTC/Fiat for their needs.

So as most loans result in the principal leaving BTS over a short period into a fairly illiquid BTS/Crypto market,  thus creating BTS sell pressure and even potentially decreasing BTS value by more than the loan amount. I don't think I'd see a lot of value in promoting them in the short to medium term personally.

(This could be a potential market with a BTC sidechain though as funds raised in BTC wouldn't have an impact.)

[Stan]

We've been mostly talking about counter party free bonds and counter party stocks, but we could also offer some interesting other products using UIA's.

Of course these are only as interesting as the trustworthy ability to pay interest by serious institutions and startups, but you could offer CD's and annuity bonds backed by quality UIA's.

The issuer sells a transferrable bond denominated in their UIA which locks up the principle + interest in one of two ways:

Certificate of Deposit (CD) which pays interest and principle at the end of its term (90 days, 1 year, 10 years...)
Annuity Bond (AB) which pays interest and principle as a series of periodic payments as an income stream.

In other words, instead of institutions lending money to unaccountable consumers,
we have consumers lending money to accountable institutions.

Now we just need issuers who can convince buyers they are a good risk over that period of time...

This might be called "crowd lending"