Topic: Decentralized Lending Protocol / Network - page 2. (Read 8686 times)
BTW, about dev funding, we could use something like Tip4Commit, or something similar because it integrates into GitHub.
I agree with jdbtracker that we need some sort of means to incentivize funding the development of the DAFNe, but it would have to be done in a way that we only get compensated in a publicly trackable way, and only in proportion to the amount of wiork we pu in. We don't want to look like another scam attempt on the community.
Gotcha.Quote
@GingerAle: The lokens are a great idea for preventing someone from DDOS'sing th network. And if they are only gonna be eaten by the network along the way, you may want to look into Freicoin's implementation of Demurrage.
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BTW, I can't promise I could get on Slack everyday, my internet got cut off and I have to rent a public PC by the hour when I get home from work.
right, yeah, nobody expects that. Bummer about the internet getting cut off.
I agree with jdbtracker that we need some sort of means to incentivize funding the development of the DAFNe, but it would have to be done in a way that we only get compensated in a publicly trackable way, and only in proportion to the amount of wiork we pu in. We don't want to look like another scam attempt on the community.
@jdbtracker: And "Tokens with encrypted keys", do you mean tokens that contain the private keys to an asset (btc, drk)?
@GingerAle: The lokens are a great idea for prventing someone from DDOS'sing th network. And if they are only gonna be eaten by the network along the way, you may want to look into Freicoin's implementation of Demurrage.
BTW, I can't promise I could get on Slack everyday, my internet got cut off and I have to rent a public PC by the hour when I get home from work.
@jdbtracker: And "Tokens with encrypted keys", do you mean tokens that contain the private keys to an asset (btc, drk)?
@GingerAle: The lokens are a great idea for prventing someone from DDOS'sing th network. And if they are only gonna be eaten by the network along the way, you may want to look into Freicoin's implementation of Demurrage.
BTW, I can't promise I could get on Slack everyday, my internet got cut off and I have to rent a public PC by the hour when I get home from work.
I will, I will, just doing stuff... so at what times are you guys on slack?
yeah I read that, sounds pretty good, a nice idea to create encrypt able Tokens, great idea.
So, your thinking of Creating a Shared Minting Coin, Everyone who participates gets paid... hmmm I like it, Combined with the above idea, we can create Tokens with Encrypted Bitcoin Keys... it simplifies the Blockchain Database significantly. Awesome. If the coins are pledged they are either returned to the Lender or Opened by the Borrower.,
So, your thinking of Creating a Shared Minting Coin, Everyone who participates gets paid... hmmm I like it, Combined with the above idea, we can create Tokens with Encrypted Bitcoin Keys... it simplifies the Blockchain Database significantly. Awesome. If the coins are pledged they are either returned to the Lender or Opened by the Borrower.,
Hrm, I don't understand the "tokens with encrypted bitcoin keys" part. Ah, I think what you're saying is that the tokens carry the information that is added to the loan ledger - they act as a vehicle to get the information into the database??
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This is one reason I would like to merge mine with Bitcoin: I want to free users computers for running the nodes... so it would require two rewards above the Shared Coins for the nodes and miners; Something to incentivise them. Double Tokens for Mining, Triple Tokens for running a node and mining. It makes our network secure, and I do think it should scale if required just in case there is a shortfall of Tokens during busy periods.
yeah, totally - merge mining is the way to go - definitely a reason to stick with SHA256. So yeah - bitcoin and loken rewards for mining. Double tokens / triple - details to figure out eventually. Scale - indeed. With these networks its so easy to monitor network activity, and just have token creation some multiplier of network activity
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This coin of course would throttle the system, we are not sure how many people would be using it at any given point or how many loans may be in circulation. It would have to be used to pay for the DAR as well; This part I believe needs to be handled like a coin-op, crypto goes in your Token, network receives appropriate levy, loan pledge goes through and Dividends get paid back to all Lenders when they decide to cash out same way through the Tokens.
Throttle - it might, but that would only be if it was scarce, right?
Pay for the DAR - i don't get this part.... you mean cash out as in leave the system? I don't think there is a cash out - you wouldn't get your lendwallets portion of the DAR if you close your node - it just gets reditristrbuted to other dars.
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But I'm not so sure a pre-mine is the best way to go, we would need funds to focus our efforts, but either options means offering up favorable coin generation to make their investment profitable or giving up a bit of the DAR.
Dude, seriously - join us on slack. Send me a pm with an email address so I can invite you to the team.
http://techcrunch.com/2014/12/21/crowdsales-funding-innovation-by-bitcoin-and-its-community/
interesting approach. Create "coins" that are software keys.
Hrm, I think this is related: perhaps we could use this to incentivise mining by coupling a "coin" to some ability to participate in the network. The details of this type of thing would have to be really ironed out, and ultimately the coins would be so superfluous that they wouldn't have any extraordinary value on an exchange. For example, every new block dumps like thousands of coins to all users (in a proportional way as suggested before, instead of the lottery fashion of bitcoin, the hashing network, from the beginning, is set up like a pool).
And the "coins" in this system would be different, because it would be a one way ticket to burn when you "spend" a coin in the network. For instance, when you want to put a loan application in, it requires 1 coin. When you want to put stake into a loan, it requires the same amount of coin as the percent of the stake (or some other amount. 0.1 coins? it ultimately doesn't matter because their will be so many of them). And then when that "coin" is spent, it doesn't come back. The network eats it.
Hrm. I'll need to think about this harder, and think of the network ramifications of this approach. I.e., say a newcomer comes in - he either has to buy some coins on in an exchange, or set up his own miner - he's guaranteed to get coins by mining, because the whole network is one pool. Doesn't matter if he's hashing 256 at 2 terahashes per second, or 400 hashes per second, he'll get a coin at some given interval.
Perhaps thats it. Everyone participating gets 1 coin every block for running a full node. Or once every 144 blocks (1 day).
And this could also be used to get investment in the software through what is essentially a pre-mine. Some people could buy loan token (loken) before the software is made, such that when the network launches, this investor group has more lokens than those just joining the network. In the beginning, this gives them the ability to spur the network on - these investors obviously have money to give out, so they'll be able to place stakes in many loans right from the beginning (due to their investment in the loken before the launch)
but once the network builds and more and more individuals are participating with full nodes and the lokens are just being created and burned left and right, the effect of the premine is gone. This investor group almost immediately has the same network power as someone joining after launch.
What do you guys think?
We'll, it'll be tough to sleep tonight as my mind churns over the ramifications of this. damn these thinkings.
interesting approach. Create "coins" that are software keys.
Hrm, I think this is related: perhaps we could use this to incentivise mining by coupling a "coin" to some ability to participate in the network. The details of this type of thing would have to be really ironed out, and ultimately the coins would be so superfluous that they wouldn't have any extraordinary value on an exchange. For example, every new block dumps like thousands of coins to all users (in a proportional way as suggested before, instead of the lottery fashion of bitcoin, the hashing network, from the beginning, is set up like a pool).
And the "coins" in this system would be different, because it would be a one way ticket to burn when you "spend" a coin in the network. For instance, when you want to put a loan application in, it requires 1 coin. When you want to put stake into a loan, it requires the same amount of coin as the percent of the stake (or some other amount. 0.1 coins? it ultimately doesn't matter because their will be so many of them). And then when that "coin" is spent, it doesn't come back. The network eats it.
Hrm. I'll need to think about this harder, and think of the network ramifications of this approach. I.e., say a newcomer comes in - he either has to buy some coins on in an exchange, or set up his own miner - he's guaranteed to get coins by mining, because the whole network is one pool. Doesn't matter if he's hashing 256 at 2 terahashes per second, or 400 hashes per second, he'll get a coin at some given interval.
Perhaps thats it. Everyone participating gets 1 coin every block for running a full node. Or once every 144 blocks (1 day).
And this could also be used to get investment in the software through what is essentially a pre-mine. Some people could buy loan token (loken) before the software is made, such that when the network launches, this investor group has more lokens than those just joining the network. In the beginning, this gives them the ability to spur the network on - these investors obviously have money to give out, so they'll be able to place stakes in many loans right from the beginning (due to their investment in the loken before the launch)
but once the network builds and more and more individuals are participating with full nodes and the lokens are just being created and burned left and right, the effect of the premine is gone. This investor group almost immediately has the same network power as someone joining after launch.
What do you guys think?
We'll, it'll be tough to sleep tonight as my mind churns over the ramifications of this. damn these thinkings.
yeah I read that, sounds pretty good, a nice idea to create encrypt able Tokens, great idea.
So, your thinking of Creating a Shared Minting Coin, Everyone who participates gets paid... hmmm I like it, Combined with the above idea, we can create Tokens with Encrypted Bitcoin Keys... it simplifies the Blockchain Database significantly. Awesome. If the coins are pledged they are either returned to the Lender or Opened by the Borrower.
This is one reason I would like to merge mine with Bitcoin: I want to free users computers for running the nodes... so it would require two rewards above the Shared Coins for the nodes and miners; Something to incentivise them. Double Tokens for Mining, Triple Tokens for running a node and mining. It makes our network secure, and I do think it should scale if required just in case there is a shortfall of Tokens during busy periods.
This coin of course would throttle the system, we are not sure how many people would be using it at any given point or how many loans may be in circulation. It would have to be used to pay for the DAR as well; This part I believe needs to be handled like a coin-op, crypto goes in your Token, network receives appropriate levy, loan pledge goes through and Dividends get paid back to all Lenders when they decide to cash out same way through the Tokens.
But I'm not so sure a pre-mine is the best way to go, we would need funds to focus our efforts, but either options means offering up favorable coin generation to make their investment profitable or giving up a bit of the DAR.
Yeah I know the feeling... I toss and turn at night just thinking about ideas. Love it.
http://techcrunch.com/2014/12/21/crowdsales-funding-innovation-by-bitcoin-and-its-community/
interesting approach. Create "coins" that are software keys.
Hrm, I think this is related: perhaps we could use this to incentivise mining by coupling a "coin" to some ability to participate in the network. The details of this type of thing would have to be really ironed out, and ultimately the coins would be so superfluous that they wouldn't have any extraordinary value on an exchange. For example, every new block dumps like thousands of coins to all users (in a proportional way as suggested before, instead of the lottery fashion of bitcoin, the hashing network, from the beginning, is set up like a pool).
And the "coins" in this system would be different, because it would be a one way ticket to burn when you "spend" a coin in the network. For instance, when you want to put a loan application in, it requires 1 coin. When you want to put stake into a loan, it requires the same amount of coin as the percent of the stake (or some other amount. 0.1 coins? it ultimately doesn't matter because their will be so many of them). And then when that "coin" is spent, it doesn't come back. The network eats it.
Hrm. I'll need to think about this harder, and think of the network ramifications of this approach. I.e., say a newcomer comes in - he either has to buy some coins on in an exchange, or set up his own miner - he's guaranteed to get coins by mining, because the whole network is one pool. Doesn't matter if he's hashing 256 at 2 terahashes per second, or 400 hashes per second, he'll get a coin at some given interval.
Perhaps thats it. Everyone participating gets 1 coin every block for running a full node. Or once every 144 blocks (1 day).
And this could also be used to get investment in the software through what is essentially a pre-mine. Some people could buy loan token (loken) before the software is made, such that when the network launches, this investor group has more lokens than those just joining the network. In the beginning, this gives them the ability to spur the network on - these investors obviously have money to give out, so they'll be able to place stakes in many loans right from the beginning (due to their investment in the loken before the launch)
but once the network builds and more and more individuals are participating with full nodes and the lokens are just being created and burned left and right, the effect of the premine is gone. This investor group almost immediately has the same network power as someone joining after launch.
What do you guys think?
We'll, it'll be tough to sleep tonight as my mind churns over the ramifications of this. damn these thinkings.
interesting approach. Create "coins" that are software keys.
Hrm, I think this is related: perhaps we could use this to incentivise mining by coupling a "coin" to some ability to participate in the network. The details of this type of thing would have to be really ironed out, and ultimately the coins would be so superfluous that they wouldn't have any extraordinary value on an exchange. For example, every new block dumps like thousands of coins to all users (in a proportional way as suggested before, instead of the lottery fashion of bitcoin, the hashing network, from the beginning, is set up like a pool).
And the "coins" in this system would be different, because it would be a one way ticket to burn when you "spend" a coin in the network. For instance, when you want to put a loan application in, it requires 1 coin. When you want to put stake into a loan, it requires the same amount of coin as the percent of the stake (or some other amount. 0.1 coins? it ultimately doesn't matter because their will be so many of them). And then when that "coin" is spent, it doesn't come back. The network eats it.
Hrm. I'll need to think about this harder, and think of the network ramifications of this approach. I.e., say a newcomer comes in - he either has to buy some coins on in an exchange, or set up his own miner - he's guaranteed to get coins by mining, because the whole network is one pool. Doesn't matter if he's hashing 256 at 2 terahashes per second, or 400 hashes per second, he'll get a coin at some given interval.
Perhaps thats it. Everyone participating gets 1 coin every block for running a full node. Or once every 144 blocks (1 day).
And this could also be used to get investment in the software through what is essentially a pre-mine. Some people could buy loan token (loken) before the software is made, such that when the network launches, this investor group has more lokens than those just joining the network. In the beginning, this gives them the ability to spur the network on - these investors obviously have money to give out, so they'll be able to place stakes in many loans right from the beginning (due to their investment in the loken before the launch)
but once the network builds and more and more individuals are participating with full nodes and the lokens are just being created and burned left and right, the effect of the premine is gone. This investor group almost immediately has the same network power as someone joining after launch.
What do you guys think?
We'll, it'll be tough to sleep tonight as my mind churns over the ramifications of this. damn these thinkings.
I've got it. Instead of some % going to devs, lets put some percentage towards wikipedia. That way we'll never have to go through these pledge drives ever again.
I do like what the Wikimedia foundation has done; It would be a good idea, free information for all, forever. Very Decentralized thinking, if everything was running like this, key infrastructure could be funded by open market applications.
I've got it. Instead of some % going to devs, lets put some percentage towards wikipedia. That way we'll never have to go through these pledge drives ever again.
Excellent we are on the same point on this: Legalities & Functionality.
We do need a way for the regular financial system to interact with our system, making it useful for everyone.
My Philosophy is use all the resources available... Standing on the shoulders of Giants to see further than we have ever before.
I figure that if we make our idea public as we build it, other people will work in tandem with us on their own time, posting as they can snippets of solutions to our overall Vision. We may get some more helpers later on, of course it does bring competition, but in the OpenSource world, I'm okay with that. Have you seen the structure of Horton Works, Map R, Cloudera; Each one is running on a different idea of Complete Openess, Opacity and Proprietary... It may be a good idea to allow the DAFNe to be very flexible in how it operates, maybe even put everything we can think of into it and let the market decide what options they want; Pretty much overwhelming the user but giving excellent choice and possible data to observe to see which are the most popular settings to apply to the top menu's.
Multiple channels for Cryptocurrencies to move through the system and maybe even blend the cryptocurrencies in some channels; Provide secure channels of verified information to flow through and unverified information in other less secure channels: A Broad Scope, Integrated into one solution.
We do need a way for the regular financial system to interact with our system, making it useful for everyone.
My Philosophy is use all the resources available... Standing on the shoulders of Giants to see further than we have ever before.
I figure that if we make our idea public as we build it, other people will work in tandem with us on their own time, posting as they can snippets of solutions to our overall Vision. We may get some more helpers later on, of course it does bring competition, but in the OpenSource world, I'm okay with that. Have you seen the structure of Horton Works, Map R, Cloudera; Each one is running on a different idea of Complete Openess, Opacity and Proprietary... It may be a good idea to allow the DAFNe to be very flexible in how it operates, maybe even put everything we can think of into it and let the market decide what options they want; Pretty much overwhelming the user but giving excellent choice and possible data to observe to see which are the most popular settings to apply to the top menu's.
Multiple channels for Cryptocurrencies to move through the system and maybe even blend the cryptocurrencies in some channels; Provide secure channels of verified information to flow through and unverified information in other less secure channels: A Broad Scope, Integrated into one solution.
I'm figuring out how to modify a Blockchain at the moment, I really think that for legal reasons we should stick to a coinless Blockchain. A Blockchain that just takes the Coins keys without generating it's own, takes it's fees from the incoming supply of coins for the DAR and R&D, then secures them using the Bitcoin networks Hashing power.
awesome. blacksquid and I were chattin in slack last night, and yeah, modifying the blockchain is probably the first thing to tackle. I agree with the coinless blockchain. Quote
Some of the Currency will have to go to us to make sure we can develop it, I guess we will be the first ones to use the system to fund ourselves. lol
We'll see. Who knows if the draper thing will work out. And there's always kickstarter. Or this
http://jumpstartfund.com
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It will have to scale properly and we have to come to grips with the fact that it will begin to fund things that are questionable to people in power. They will come after us for developing this venue for re-allocating funds outside their control... of course we can go completely Not For Profit and live off Donations, giving us some sense that we are doing this for Freedom! Just look at what happened to Shrem, got arrested for mentioning/knowing that people are going to use it for nefarious purposes...
Hrm, interesting legal points. For these reasons I think we should keep any "profit" out of the picture. I never imagined this to create pure profit, but only capable of return if indeed I were to utilize the DAFNe to invest in something.
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how many Billions does HSBC Launder? I certainly like the fact that no-one but the people get to decide what is funded and what is not, but this will have to be done with the utmost caution.
Liabilities will have to be figured out, a way to put the onus, in software, squarely on the Lender and Borrower.
Indeed, good point. Liabilities will have to be figured out, a way to put the onus, in software, squarely on the Lender and Borrower.
At the end of the day, we're really just making software. Granted, viruses are software. So perhaps, yeah, somewhere in the process, it is clearly stated that the individual making the decision to submit or receive in the DAFNe is their legal responsibility.
I think, generally, that the DAFNe is not a mixing service because the participants need to be trusted actors with DAFNe-derived credit histories and or existing credit histories.
But yeah, I guess it would be technically possible for an individual to create an entire DAFNe alter-ego, where people think they are investing in a car loan but really its something else.
Hrm, I just realized a fundamental weakness of the whole thing is the lack of collateral - i.e., conventional lending works because the bank technically owns the car (or the house)... could an autonomous decentralized network "own" something? Then again, the purpose of collateral is to incentivise repayment of a loan, and as we saw when push really came to shove, people just walked away from their homes anyway. So really, once again, the main incentive an individual would have to be a good actor would be continued participation in the network.
I'm figuring out how to modify a Blockchain at the moment, I really think that for legal reasons we should stick to a coinless Blockchain. A Blockchain that just takes the Coins keys without generating it's own, takes it's fees from the incoming supply of coins for the DAR and R&D, then secures them using the Bitcoin networks Hashing power.
Some of the Currency will have to go to us to make sure we can develop it, I guess we will be the first ones to use the system to fund ourselves. lol
It will have to scale properly and we have to come to grips with the fact that it will begin to fund things that are questionable to people in power. They will come after us for developing this venue for re-allocating funds outside their control... of course we can go completely Not For Profit and live off Donations, giving us some sense that we are doing this for Freedom! Just look at what happened to Shrem, got arrested for mentioning/knowing that people are going to use it for nefarious purposes... how many Billions does HSBC Launder? In the Land of the Blind, Ignorance is Bliss and to be Wise is Folly. I certainly like the fact that no-one but the people get to decide what is funded and what is not, but this will have to be done with the utmost caution.
Liabilities will have to be figured out, a way to put the onus, in software, squarely on the Lender and Borrower.
Some of the Currency will have to go to us to make sure we can develop it, I guess we will be the first ones to use the system to fund ourselves. lol
It will have to scale properly and we have to come to grips with the fact that it will begin to fund things that are questionable to people in power. They will come after us for developing this venue for re-allocating funds outside their control... of course we can go completely Not For Profit and live off Donations, giving us some sense that we are doing this for Freedom! Just look at what happened to Shrem, got arrested for mentioning/knowing that people are going to use it for nefarious purposes... how many Billions does HSBC Launder? In the Land of the Blind, Ignorance is Bliss and to be Wise is Folly. I certainly like the fact that no-one but the people get to decide what is funded and what is not, but this will have to be done with the utmost caution.
Liabilities will have to be figured out, a way to put the onus, in software, squarely on the Lender and Borrower.
I've heard about python as well. I've heard complaints that its slow, but ultimately the first iteration can be python, and then others can translate it to a faster language.
@GingerAle: Slack is a very good way to coordinate better, you can send me an invite at theblacksquid2012(at)gmail.com.
@jdbtracker: I mostly have experience in Python and JavaScript, and I'm reading up on C++. I highly reccomend using Python as a base language, as there's a bigger open source community that could help write the could and get us off the ground.
As for the application stack, this is what this is what I think its going to look like, based on what I understand from the project. What do you guys think?
Node Consensus-generated blockchain (eg. Ripple) --> Internal API --> Smart Contracts --> DAR --> Lendwallet (Ripple? POS Coin fork? Build from Scratch?!) --> External API
@jdbtracker: I mostly have experience in Python and JavaScript, and I'm reading up on C++. I highly reccomend using Python as a base language, as there's a bigger open source community that could help write the could and get us off the ground.
As for the application stack, this is what this is what I think its going to look like, based on what I understand from the project. What do you guys think?
Node Consensus-generated blockchain (eg. Ripple) --> Internal API --> Smart Contracts --> DAR --> Lendwallet (Ripple? POS Coin fork? Build from Scratch?!) --> External API
So, slack requires the use of email to login. If you want to make a phony/new email address and then PM me, I can send you the invite.
I think i finally distilled this thing into its essential components. here is a draft of a digestable whitepaper.
Decentralized Autonomous Lending
made possible by the
Decentralized Autonomous Financial Networking (DAFNe) Protocol
A peer-to-peer transaction distribution system
+
LendWallet
Wallet software controlled by the DAFNe
+
Decentralized Autonomous Reserve (DAR)
A distributed reserve for cryptocurrency
Abstract. Economic instability has plagued societies throughout history. We present the supposition that this instability is an unintended emergent property of lending within a fractional reserve system. To recreate the benefits of conventional banking without fractional reserve, we present an alternative type of banking called the Decentralized Autonomous Financial Networking protocol. This protocol exploits heretofore underutilized aspects of cryptocurrency: extreme currency partitioning and a worldwide network of currency holders. This solution requires the addition of a sister blockchain network (the DAFNe) that interacts with a cryptocurrency's primary blockchain. In this network, transactions are built in partitions, wherein a party creates a contract and additional parties fill this contract until there are no more partitions, at which point the contract is complete and the constructed transaction is submitted to the primary blockchain by the DAFNe. Proper function of the DAFNe requires a unique wallet software controlled by the DAFNe. To provide risk mitigation and incentivize lending in the network, a decentralized autonomous reserve is created to provide an insurance pool for defaulted loans. Ultimately, a lending network is created where only those partaking in lending and maintaining the network receive revenue.
1. Introduction
Lending is an important function of money that allows a society to literally invest in the future. Investment mechanisms combined with fractional reserve banking, however, have repeatedly been shown to introduce instability into world economies. Here, we present a software suite that allows lending and investing to maintain the simplistic function of one party transferring money to a second party under contract to return the money with interest. Using cryptocurrencies (either as a payment system or a currency) in combination with the DAFNe, LendWallet, and DAR, we can create a worldwide banking platform that mimics conventional banking without the need for fractional reserve and maintains economic stability through algorithmic management of the financial network.
2. Contracts
We define a contract as a ledger entry containing the receiving addresses and the sending addresses. For the lending network, the receiving address is fixed, and the sending addresses are not fixed. A contract is initiated by one party (the borrower), wherein they submit the contract to the network and the contract contains a set point – in the lending case, a loan amount. Participating nodes in the network recognize the ledger entry and report to end users that the contract is unfilled. Lenders stake a claim in this contract through a digital signature – similar to making a transaction in a cryptocurrency network – a lender is sending a stake to the loan. The ledger records the amount of stake and the required cryptocurrency address in this secondary blockchain, and the network nodes communicate the change in the contract. This continues until the contract reaches the set point, at which point the network submits the constructed transaction to the cryptocurrency network.
3. LendWallet software
In order for the DAFNe blockchain to function with the primary cryptocurrency blockchain, the DAFNe must be able to lock funds in place once they have been committed to a contract. This is achieved using specialized wallet (lendwallet) software that monitors the DAFNe blockchain and identifies when the lendwallet's address has staked a claim in a contract. This information locks that amount in the lendwallet by preventing the user from withdrawing funds below that amount.
The lendwallet also functions to autonomously submit the transaction to the bitcoin network when the set point is reached. The lendwallet “mines” the sister blockchain, and rewards are derived from interest and fees associated with the contracts in the sister blockchain.
4. Decentralized Autonomous Reserve
In order to provide an insurance mechanism for loan default and to incentivize lenders, a reserve system is created that provides dividends. The reserve insures loans based on the number of investors in a given loan. Collusion to defraud the system decreases as the number of investors grow, thus the percent of the loan that is insured increases as the number of investors increases. The reserve remains decentralized using the locking mechanism of the lendwallet, wherein the coins are stored locally in the nodes wallet, but under the control of the DAFNe.
5. End Result
The suite of software described above creates a banking system in which money velocity is encouraged by exploiting the extreme partitioning capacity of cryptocurrencies and the ability to include infinite parties in a single transaction. In this network, hundreds of thousands of individuals can claim stake in an individual loan. By staking these micro amounts of money, the “cost” of the loan felt by an individual is insignificant, but the net effect of the network is the transfer of a significant investment.
6. Other applications of the the DAFNe protocol
The primary technological advancement of the DAFNe protocol is the ability to build and secure a virtual financial transaction to be submitted to a cryptocurrency network. The fundamental contract can be utilized for other purposes – such as buy and sell orders, where a particular set price or number of participants is what ultimately submits the transaction to the primary blockchain. The DAFNe can also be utilized as internal business infrastructure, where branches of an organization place requisitions to a central actor. The lending protocol, as described above, can also be utilized as a crowdfunding (granting) platform. The DAFNe protocol also provides an immediate means to create and monitor credit history.
7. Conclusion
Here we provide the means to recreate the benefits of conventional banking without the need for a fractional reserve system by exploiting the extreme partitioning of cryptographic currencies. This achieved using a sister blockchain alongside the primary currency blockchain and wallet software that is controlled by the DAFNe protocol. Finally, a dentralized autonomous reserve is introduced to provide insurance and incentive for participating in the network.
I think i finally distilled this thing into its essential components. here is a draft of a digestable whitepaper.
Decentralized Autonomous Lending
made possible by the
Decentralized Autonomous Financial Networking (DAFNe) Protocol
A peer-to-peer transaction distribution system
+
LendWallet
Wallet software controlled by the DAFNe
+
Decentralized Autonomous Reserve (DAR)
A distributed reserve for cryptocurrency
Abstract. Economic instability has plagued societies throughout history. We present the supposition that this instability is an unintended emergent property of lending within a fractional reserve system. To recreate the benefits of conventional banking without fractional reserve, we present an alternative type of banking called the Decentralized Autonomous Financial Networking protocol. This protocol exploits heretofore underutilized aspects of cryptocurrency: extreme currency partitioning and a worldwide network of currency holders. This solution requires the addition of a sister blockchain network (the DAFNe) that interacts with a cryptocurrency's primary blockchain. In this network, transactions are built in partitions, wherein a party creates a contract and additional parties fill this contract until there are no more partitions, at which point the contract is complete and the constructed transaction is submitted to the primary blockchain by the DAFNe. Proper function of the DAFNe requires a unique wallet software controlled by the DAFNe. To provide risk mitigation and incentivize lending in the network, a decentralized autonomous reserve is created to provide an insurance pool for defaulted loans. Ultimately, a lending network is created where only those partaking in lending and maintaining the network receive revenue.
1. Introduction
Lending is an important function of money that allows a society to literally invest in the future. Investment mechanisms combined with fractional reserve banking, however, have repeatedly been shown to introduce instability into world economies. Here, we present a software suite that allows lending and investing to maintain the simplistic function of one party transferring money to a second party under contract to return the money with interest. Using cryptocurrencies (either as a payment system or a currency) in combination with the DAFNe, LendWallet, and DAR, we can create a worldwide banking platform that mimics conventional banking without the need for fractional reserve and maintains economic stability through algorithmic management of the financial network.
2. Contracts
We define a contract as a ledger entry containing the receiving addresses and the sending addresses. For the lending network, the receiving address is fixed, and the sending addresses are not fixed. A contract is initiated by one party (the borrower), wherein they submit the contract to the network and the contract contains a set point – in the lending case, a loan amount. Participating nodes in the network recognize the ledger entry and report to end users that the contract is unfilled. Lenders stake a claim in this contract through a digital signature – similar to making a transaction in a cryptocurrency network – a lender is sending a stake to the loan. The ledger records the amount of stake and the required cryptocurrency address in this secondary blockchain, and the network nodes communicate the change in the contract. This continues until the contract reaches the set point, at which point the network submits the constructed transaction to the cryptocurrency network.
3. LendWallet software
In order for the DAFNe blockchain to function with the primary cryptocurrency blockchain, the DAFNe must be able to lock funds in place once they have been committed to a contract. This is achieved using specialized wallet (lendwallet) software that monitors the DAFNe blockchain and identifies when the lendwallet's address has staked a claim in a contract. This information locks that amount in the lendwallet by preventing the user from withdrawing funds below that amount.
The lendwallet also functions to autonomously submit the transaction to the bitcoin network when the set point is reached. The lendwallet “mines” the sister blockchain, and rewards are derived from interest and fees associated with the contracts in the sister blockchain.
4. Decentralized Autonomous Reserve
In order to provide an insurance mechanism for loan default and to incentivize lenders, a reserve system is created that provides dividends. The reserve insures loans based on the number of investors in a given loan. Collusion to defraud the system decreases as the number of investors grow, thus the percent of the loan that is insured increases as the number of investors increases. The reserve remains decentralized using the locking mechanism of the lendwallet, wherein the coins are stored locally in the nodes wallet, but under the control of the DAFNe.
5. End Result
The suite of software described above creates a banking system in which money velocity is encouraged by exploiting the extreme partitioning capacity of cryptocurrencies and the ability to include infinite parties in a single transaction. In this network, hundreds of thousands of individuals can claim stake in an individual loan. By staking these micro amounts of money, the “cost” of the loan felt by an individual is insignificant, but the net effect of the network is the transfer of a significant investment.
6. Other applications of the the DAFNe protocol
The primary technological advancement of the DAFNe protocol is the ability to build and secure a virtual financial transaction to be submitted to a cryptocurrency network. The fundamental contract can be utilized for other purposes – such as buy and sell orders, where a particular set price or number of participants is what ultimately submits the transaction to the primary blockchain. The DAFNe can also be utilized as internal business infrastructure, where branches of an organization place requisitions to a central actor. The lending protocol, as described above, can also be utilized as a crowdfunding (granting) platform. The DAFNe protocol also provides an immediate means to create and monitor credit history.
7. Conclusion
Here we provide the means to recreate the benefits of conventional banking without the need for a fractional reserve system by exploiting the extreme partitioning of cryptographic currencies. This achieved using a sister blockchain alongside the primary currency blockchain and wallet software that is controlled by the DAFNe protocol. Finally, a dentralized autonomous reserve is introduced to provide insurance and incentive for participating in the network.
All libraries are good, We'll want to throw everything we have at it at this point; Once we have something working we will be able to fine tune it and plug any security holes we may have later.
Just so everyone knows, I am only a beginner at Programming but have been checking out the code for a lot of the Cryptocurrency projects for almost two years now.
so, I can read C/C++, Python, PHP, Javascript, Java, HTML5, CSS3, XML, Ajax, ATS... If it looks like C I can tease it out. but we will need people who actually can code rather than just build the layout.
Just so everyone knows, I am only a beginner at Programming but have been checking out the code for a lot of the Cryptocurrency projects for almost two years now.
so, I can read C/C++, Python, PHP, Javascript, Java, HTML5, CSS3, XML, Ajax, ATS... If it looks like C I can tease it out. but we will need people who actually can code rather than just build the layout.
@jdbtracker: Do you think we could build the DAFNE using python with c/c++ libraries that has python wrappers?
Does anyone have any skill in creating web animations for the required youtube video?
When I get back to home PC, I will create a slack channel.
lookin through adam drapers thingy, came across this
http://www.pylonloans.com/
no idea how their system works though. "on the blockchain" would indicate to me THE blockchain.
When I get back to home PC, I will create a slack channel.
lookin through adam drapers thingy, came across this
http://www.pylonloans.com/
no idea how their system works though. "on the blockchain" would indicate to me THE blockchain.
Trust me this is buildable now...
It's like setting up a website, you got your interface, your distributed platform and a Database.
and besides they are trying to do it by creating a new coin; we can do it without one bypassing any legislation anywhere in the world. We are not touching any of the coins merely encrypting the private key into our Blockchain and moving it around internally without ever moving the Bitcoins.
We know what we have to do, the technology is already setup... now the hard part; The parameters need to be ironed out, good settings will make the difference whether we succeed or fail for the deadline.
It's like setting up a website, you got your interface, your distributed platform and a Database.
and besides they are trying to do it by creating a new coin; we can do it without one bypassing any legislation anywhere in the world. We are not touching any of the coins merely encrypting the private key into our Blockchain and moving it around internally without ever moving the Bitcoins.
We know what we have to do, the technology is already setup... now the hard part; The parameters need to be ironed out, good settings will make the difference whether we succeed or fail for the deadline.
Ethereum might do it, but its not even released yet. We can build something now, and integrate with Eth or any other 2.0 tech later
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