GN Compass Creating Liquidity in Lending Market with Cryptocurrency-backed Loans

GN Compass Creating Liquidity in Lending Market with Cryptocurrency-backed Loans

GN Compass is creating a peer-to-peer cryptocurrency-backed loans lending platform with a goal of creating constant liquidity in the lending market. Investors’ funds are pooled at a certain interest rate and backed by Compass tokens (GNCT) that represent the amount invested. These funds are then loaned to borrowers, who pay these loans back with interest to the lenders. All transactions on the platform are verified and distributed on the Ethereum blockchain.

To begin lending, investors sign up on the platform and specify their investment goals, e.g. retirement planning, preferred repayment cycle etc., investment amount, interest rate, and length of loan. A funding source is then connected and a secure digital wallet attached to it where all transfer and payments will be made. Funds are finally sent to a loan pool, with repayments being made in GNCT. Investors are able to liquidate loans in their portfolio by selling the GNCT backing their loans to other investors, transferring the ownership of the debt.

Borrowers sign up on the platform and have the option of connecting their Facebook account, enabling GN Compass to retrieve basic information about them. After their profile is complete and the required documents have been processed, a risk assessment is completed and potential borrowers are given a risk rating. Provided this risk rating is within the platform’s parameters, loans can range from $1,000 to $50,000 with an interest rate of 3.99% to 11.99%.

Loan applications come in the form of smart contracts between lenders and borrowers that specify the loan amount, length and repayment cycle. These are sent to a pool of other loan requests with the same credit rating to be funded.

GN Compass’ credit system will use traditional credit scores, mobile data, and social media analytics to assess risk and assign a GN Compass credit rating from A+ to B. First-time borrowers must have a credit score of 660 or above, a debt-to-income ratio of around 19.99%, six-year credit history and permanent residency or citizenship status.

The decentralised structure behind GN Compass claims to be addressing three issues with their origin in high-interest payday loan providers and highly-regulated security-backed loans from alternative peer-to-peer lending platforms. These are that traditionally centralised structures lack transparency, have low liquidity, and have only one-dimensional credit scores that simply aggregate and analyse public consumer data.

In the future, the company intends to offer micro loans of between $150 and $1000 at interest rates from 13.99% to 16.99% to higher-risk borrowers with credit ratings of C+ to D.

GN Compass Creating Liquidity in Lending Market with Cryptocurrency-backed Loans
Rate this post

Chilean Banks Stop Services to Cryptocurrency Exchanges

Banco Estado, the last bank in Chile offering cryptocurrency related services has closed three accounts belonging to three cryptocurrency trading platforms. The bank has decided that henceforth it will not…

0 Comments

eToro to Launch Cryptocurrency Exchange and Wallet App in the US

eToro is set to launch a cryptocurrency exchange in the US by the end of the year. The platform will also have a wallet for users when it gains approval,…

1 Comment

Leave a Reply

Be the First to Comment!

avatar
  Subscribe  
Notify of
Fear of Missing Out?
To keep up to date with news, offers and tips, please let us know that you would like to receive email updates from us by entering your email address and clicking to subscribe. How do we use you information?

SUBSCRIBE 
close-link
close-link