Colendi Project is a sophisticated credit scoring system that uses new information sources in order to evaluate the eligibility of potential borrowers consisting of unbanked and underbanked people in comparison to traditional measures. As can be seen from Colendi roadmap, we are assertive about creating new opportunities for the underprivileged individuals and businesses with the help of our non-traditional credit scoring methods.
In its core, a simple end product for the Colendi ecosystem is built and it will work within the traditional demand and supply behavior logic in accordance with the aim of creating an easy user experience.
As the first integral element of our ecosystem, we have already mentioned the representatives of the demand side of our protocol. These users can be called the “borrowers”. As a person or entity receiving a monetary loan from a lender with the agreement that the loan will be repaid, a borrower has various opportunities in Colendi ecosystem. For more detailed information about borrowers, click to here.
In this instance, in addition to the borrower, we will continue introducing other protocol layer contributors, who are lenders, merchants and data partners and consequently, we will elaborate on the non-protocol layer contributors who are integrators and validators.
Protocol Layer Contributors
Lender is one of the most important contributors in Colendi Ecosystem. In the definitive sense of a traditional lender, a lender in Colendi ecosystem is an individual, group or institution that gives short-term loans to potential borrowers with the repayment expectation. Merchants expecting to sell their products to reliable customers may also be considered lenders in this case. Since Colendi platform is designed to reach out to loyal potential customer base by providing microcredit for underbanked and unbanked, who include financially highly eligible people, the possibility to access new lending opportunities via P2P lending system is an important incentive for potential lenders in Colendi ecosystem. That is the building block of the real sharing economy envisioned by Colendi Project.
Lenders are not required to stake Colendi Tokens if they agree to issue the entire amount of requested credit by the borrowers if a borrower satisfies the score levels defined by a lender. However, they will be required to stake a certain amount of Colendi Tokens for accessing Colendi Protocol, in case they fail or reject to comply with this rule.
For lending purposes, lenders can interact with the data query service of Colendi through the score queries. In order to get information about the creditworthiness of borrowers and to set certain standards for issuing microcredit, lenders must pay query fee. However, in compliance with the secure computation environment in Colendi, lenders can not have access to any private financial, smartphone or social media data. They will be only allowed to access to borrowers’ information collected by the third party KYC providers integrating with Colendi ID once a deal is done on the platform. Colendi will provide the infrastructure in the platform to leverage existing data for the third party scoring algorithm developers for future expansion. The process of developing these algorithms will be transparent, otherwise ensuring reliability and security of scoring algorithms would be hard. Colendi will provide whitelists of scoring algorithms stored in Colendi-managed smart contract. Thanks to Colendi scoring algorithms that operate on a comprehensive database, non-performing loan risks are minimized as the potential number of borrowers increase.
In its simplest form, as a wholesaler or retailer is a merchant that buys goods from any source for resale to anyone on the basis of self-interest. Accordingly, in Colendi ecosystem, the merchant can be simply defined as actors who engage in trading activities according to rules and terms of Colendi protocol. Potential customers who have not any access to financial services due to the failure of traditional credit scoring methods to evaluate these customers’ eligibility are able to buy the goods of merchants with the help of microcredits provided by Colendi platform according to Colendi’s elaborate credit scoring mechanism.
Merchants in Colendi ecosystem can be e-commerce networks, retail shops, and any service providers. Although all merchants are encouraged to act as lenders to maximize mutual benefit from Colendi services, they are not obliged to be lenders in the ecosystem. If merchants act as lenders, they would be able to complete the lending process over the goods that they will sell in exchange for staking the corresponding number of tokens. On the other hand, parties who only assume the role of merchants are not required to stake at all. However, it is worth bearing in mind that merchants who contribute to the system as lenders, data partners or data integrators are rewarded with the extra revenue via Colendi’s rewarding mechanism.
1.4 Data Partner
As another agency in Colendi Ecosystem, data partners are the most important actors for getting access to a diversified set of data about users. In accordance with Colendi privacy and reliability principles, these data will be either encrypted with users’ public keys or anonymized and may only properly take place in Colendi network after getting user approval for accessing the data of the data partners.
Data partners that are able to provide necessary and useful information about users are generally major companies looking to obtain more reliable credit scoring services such as telcos, banks, retail chain stores etc. Initially, their aim is to generate revenue from the redistribution of the tokens charged on transactional queries. Other incentives for data partners are to access a new financial scoring technology that will provide a reliable benchmark for financing more commercial activities and staking rewards. This staking mechanism is used to assure that data partners comply with Colendi’s data standards and to have their best interests in long term partnerships. Partners are rewarded and especially early ones can earn disproportionate rewards when they can contribute to data storage on the network from related transactions.
2.Non-Protocol Layer Contributors
Rather than to be directly involved in Colendi’s protocol layer credit scoring and microcredit system, these contributors act as complimentary components in Colendi network that help us a build a fully self-sufficient business model. These subsidiary actors are integrators and validators in our ecosystem.
As well as any protocol layer persona, data integrator, one of the non-protocol layer contributor, is another third party authority contributing to the creditworthiness evaluation process in Colendi ecosystem. These integrators use Colendi’s tools to integrate data partners and merchants into Colendi network.
In order to gain rewards, integrators stake a certain number of tokens. Accordingly, since integrators are responsible for the congruity of their network, integrator rewards will be staked until validation of referred borrowers, lenders, merchants or data partners are completed. In case of malicious actions by integrators, their staked tokens will be subject to slashing.
Data integrators may constitute local payment integration companies that seek to generate extra income over referral programs. The important source of income is also the redistribution of tokens charged on transactional queries of integrated merchants. Successful scoring queries are rewarded on the basis of contributed data from the related transaction. This reward and punishment mechanism provides an active and loyal data integrator network in order to realize aimed distribution. Accordingly, it can be said that integrators play a crucial role in Colendi’s work token model.
As another non-protocol layer persona, validators are the actors who validate protocol layer contributors and reject the inadequate ones to join the Colendi network. Thus, it is possible to say that its main function is to make decentralized network building process more reliable.
Validators in Colendi ecosystem can be anyone who contributes to Colendi Token sale and the origin of incentive to be a validator in this system is potential rewards earned by validating the protocol layer contributor candidates apart from borrowers.
Accordingly, for all events of validations and challenges, validators are required to stake Colendi Tokens in order to access Colendi TCR system. As a concept, Colendi Token Curated Registry (TCR) system that includes the list of protocol layer users staking Colendi tokens for decentralized validation is offered by Mike Goldin of Consensys in order to allow a greater audience to interact with a utility token network as validators.
After all, in the light of all the things mentioned above, it is possible to say that Colendi project offers a reliable microcredit cycle between afore-mentioned six actors. Accordingly, in comparison to the expensive, non-digital and traditional methods, Colendi credit scoring mechanism will not only enable potential borrowers to access microcredits at ease, it will also offer more comprehensive risk analysis tools for lenders in the existence of well-conducted process of ID creation, data integration, score evaluation, and active token distribution etc. For more detailed information about these other elements of Colendi ecosystem, keep on reading us!