Decentralization and the Creation of Roles in the World of Karma
Karma’s unique approach to the lending market has created an ecosystem where every participant can play a role: borrower, investor, insurer, guarantor, collector, portfolio manager, lawyer and other roles which will be apart of the ecosystem in the future. Karma, the P2P financial platform with an ITO starting November 29, but with a whitelist registration which is ongoing, will delegate these roles to the participants of the community while enabling participants to freely choose and create roles.
In the beginning, Karma will undertake a number of roles and play a key part in the growth of the ecosystem. Once the required number of users have joined the platform and assumed the compulsory roles needed to allow the ecosystem to run successfully, Karma, as a company, will step back and allow all roles to be performed by the users.
The roles within the Karma ecosystem are numerous, but there are key people who are needed, including:
Investors can choose loan applications to support, or present their own prospectus/portfolios for people or businesses looking for an investment. Investors make money by financing fascinating projects and complete the social mission by providing assets to people and businesses.
Lenders can apply for a resource request and agree to take applications to deliver investments. The lender’s interest in this matter would be to fulfill projects, establish businesses and apply for money.
Guarantors raise the likelihood of a loan being repaid. The interest of guarantor is to receive a reward for a surety, fulfill the social mission by bailing out people, boosting reputation and receiving a bonus when the loan is paid back.
Scoring agents supply tools for scoring borrower applications. They are able to offer their scoring by any parameters they find suitable. The interest of scoring agents is to receive a percentage of the transaction when the loan is paid back, or in case of default, when the loan is being handed over to collectors.
The role of Analyst is going to be formed in the future. Their main part in the ecosystem would be to evaluate the creditworthiness of the loan applicant. They can also conduct market research and competitive analyses. It’s all necessary because the borrower must be an actual person with good motives and have enough experience to take part of this platform. For example, on the Airbnb platform when renting, the ‘Checked by Airbnb’ badge on the owner’s site is an important trust factor which means that the Airbnb delegate has made an audit implicating that everything is in the right order. In addition, this badge gives access to a separate list of trusted hosts, became more noticeable in search results and creates a greater amount of trust amongst the community members.
Sellers will attract new members to the system via referral links, and they will be compensated for engaging borrowers – but only if the borrowers have completed their obligations. When the seller manages to engage an investor, then he’ll get a percentage of each loan issued by that investor during the year.
Collectors make sure that the local collection of debts takes place on the lender’s territory, and they can assign interest in the recovery of debt. If a debt collector is contacted, and a default is confirmed, then the collector signs an electronic smart contract with the investor, implicating that he can act on behalf of the investor. When the client is pleased with the collector’s services, then collectors obtain a plus in Karma and if not, a minus. Collections are the most extreme measure to take place in the ecosystem and is required when a person takes part of the system with the wish to harm others. The main idea of the project is that people will take part freely, understand the risks, and agree to act on their own and in the community’s interests.
There will be Credit Risk and Currency Risk Insurance on the platform. With credit risk, the case of default, insurance will be paid to investors. They are able to ensure from 1% to 100% of the risk. Both credit and currency risks are actions that are more suitable for professionals, as insurance for private investors without collateral will be valueless. With currency risks, the insurer covers the loss of variation in the exchange rate to the investor, and the insurer gets a premium from the transaction.