Hello everyone,I just started to study information about the project. I would like to know more information about the insurance structure. How will this be realized?
Hi @bpcguy and welcome to our project! Have you joined our Telegram and Discord already? Back to your question: When issuing a loan, insurance coverage works the following way:
1. A part of the credit body concerning no return is secured with KYC Masternodes stake (don't mess with PoS masternode, these are different masternodes)
2. Another part of the loan body in case of no return is guaranteed with Auditor Masternodes stake
3. The total amount of the support entirely depends on the level of the risk of the application. The higher the risk, the more security deposit to be required by the network.
Yes, I've already joined them, thanks!
That's an interesting. But where are this insurance money come from? Who pays them?
@bpcguy, that's quite easy, e.g.: the borrower comes up. KYC masternode checked their ID. Auditor checked their docs for credit purpose. After that KYC and Auditor have to kinda vouch for them. KYC masternode freezes a part of their stake as a guarantee, that the ID is checked well. So do the auditors (more than one) - freeze their parts. If money is not returned, these frozen stakes go to loaners (wallets owners issuing the loan). If money is returned, than these parts are not frozen anymore and can be used for further work. And all participants get their interest. The network will adjust the insurance deposit by inself. In case of 10% of non-returns the system will require 10%+ interest rate of all insurance deposit. E.g.: 2% money from KYC, 8% money from 4 Auditor - so 2% from everyone. However, according to BRAC report (http://www.brac.net/sites/default/files/BRAC-at-a-glance-december-2012.pdf , page 3 ) and Muhammad Yunus experience repayment rate is 98.76%
