Listen to this articleGN Compass, is a peer-to-peer lending platform for Cryptocurrency-Backed Loans. Investors invest funds into a pool at a certain interest rate with the invested amount being backed by Compass tokens(GNCT). The invested amount is then disbursed to Borrowers. Borrowers pay loans (principal plus interest) back to the Lenders. All transactions are verified and distributed on the Ethereum Blockchain.
To learn more about the GN Compass, we sat down with Co-Founder, Michael Collins:
Q: You’ve recently joined the Bancor Network for decentralized liquidity; could you tell us something more?
A: Yes. Investors can freely exit their position by converting their GNCT tokens, hence allowing continuous liquidity. Bancor’s smart contracts utilize a “connector” token method which will allows GN Compass tokens to automatically convert to BNT, ETH and any integrated token in the liquidity network, according to an open- source algorithmic pricing mechanism. These conversions take place directly between smart contracts, outside of exchanges. This integration will further our intention to create new value for ourselves, bancor and for all others in the network. Additional exposure through the network will benefit the GN Compass community who will also enjoy continuous convertibility and relative price stability.
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Q: Could you provide an example of how your platform should work?
A: Loans are backed with our token called GNCT. The amount of the loan we back with GNCT will depends on the pool that the loan is in (borrowers are vetted and placed in pools based on their risk level), for example an ‘A+’ pool loan will get 100% backing while ‘C’ and ‘D’, which are our micro-loans, will get 0% backing and this backing is also tiered from A+ to C. We will also create constant liquidity in the lending market, this is accomplished by allowing investors to sell portions of loans or their entire portfolios. Investors are not locked in to the term of a loan and can liquidate loans for any reason (E.g. financial hardship, increased GNCT price etc.) only after a certain no-trade time period has been reached. The buying investors will reap the benefits of the loans being paid back by borrowers while the selling investor still makes a profit. By using blockchain technology to verify and distribute all transactions across the Ethereum network, it guarantees transparency.
Borrowers can access funds at a fraction of the time compared to banks and pay lower interest rates. For example, a standard Credit Card typically charges a 19.99% interest rate; our highest risk rating is ‘D’, which as mentioned earlier, falls under our microloans division has an APR of 16.99%. Also, we have our own credit system that doesn’t just use consumer aggregation (credit scores) to make loan decisions. Borrowers make loan requests using smart contracts only after they have passed our three-step vetting process which one of these steps included using a service from Identity Mind for our KYC/AML. After this three-step process they will assigned a Compass credit rating.
Q: What makes GN Compass unique?
A: Well there are a few things. 1. We are the first lending platform to use its own currency to back investors funds. 2. We also don’t require borrowers to put up their cryptocurrency e.g. Bitcoin as collateral in order to borrow funds. 3. We are also very excited to announce that we offer the very first token in the world that has a 100% collateral backing. On the 29th of January, we signed a deal with a collateral company in Europe this protects our investors investments.
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Q: What are your plans for the future?
A: We plan on releasing the platform in Q4 of this year after that we will provide more lending instruments like mortgages, student loan financing and refinancing, business loans etc. We will be looking at moving to other markets as well, for example, we are currently working on a partnership with some Chinese investors to have a p2p lending platform developed for the Chinese market. We are also formulating plans with our collateral company on leveraging our bond to raise the price of the GNCT from $0.30 to $100 USD.
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