When small businesses such as brick-and-mortar stores want funding, they would approach banks to withdraw a loan. The banks perform a rigorous screening check before they agree to handing out the loan. This makes the loaning process very tedious and stressful for small business owners. In the spirit of decentralized applications, we've chosen to tackle this problem and moved this process onto the blockchain!
What it does
Imagine an Entrepreneur in Thailand wants to open up a small food stand, with a small twist. He needs $500 to buy the stand and get started. You (or a group) decide to jump in and offer to help with the capital needed. You buy a contract which pays out to the Entrepreneur in increments initially.
The food stand is a hit and the profits are shared between the investors and entrepreneur.
So here’s the twist, a few questions came up.
1) How do we get the business to post his or her profits and keep them from simply running with that initial capital? 2) How do we give investors enough information on the business they’re getting in to. 3) How are profits going to be shared?
To solve these problems, we applied Mechanism Design. 1) Businesses are incentivized to stay because the smart contract doles out the funding incrementally. On top of that, there is a floating price on the contract. So, imagine an investor buys that contract for $500. That money is invested into the small business. At the same time that contract itself now has a value based on how profitable the business is. So the more profits the small business posts the higher the valuation for this contract. Another investor (B) seeing the day to day profits coming in can buy this contract from investor (A). The more profitable the business the more expensive the contract. If the contract is sold, the price is split between Investor (A) and the Entrepreneur.
2) Businesses have to submit their finance statements through the app onto the blockchain which the investor can take a look at to ensure the business is on track to reach their stated financial goals. This keeps the business accountable and the investors the assurance that their money is being put to good use.
3) The percentage of the business' profits to be shared with the investor is determined when the proposal is being made. The investor can take a look at it and decide if that share of the profits is worth the investment. At the end of every month, the business has to inform the app of its profits together with the proof (mentioned above) and send a transaction for the investor's share of the profits.
How We built it
We built this web app using:
- Node.js (backend)
- React, MaterialUI (frontend)
- Solidity (blockchain)
- Web3.js (API)
Challenges We ran into
We couldn't figure integrate 0x.js, Storj, and the Consensys prize.
Accomplishments that We're proud of
Most of us are super new to developing dapps and we didn't have a full team going in. It was super fun working with each other and creating this dapp together!
What I learned
I learned a lot about the blockchain and why it is beneficial to do certain operations on the blockchain.