Decentralized Community Financing

Inspiration

Pre-purchase financing pool (PPFP) is widely used as the best option for financing or loans in developing countries like India (Chitfunds) and Brazil.

What it does

Decentralized Community Financing is based on a type of loan called pre purchasing financing pool. It consists in gathering a certain number of people interested in buying, for instance, a property each, minimizing the interest rates of regular individual loans.

A group of people deposits an initial pot, equally distributed, as the collateral. The pot size is calculated based on the "future purchase" value and the loan-to-value ratio. For example: a group of users want to buy a 20,000 DAI car each, the amount paid per month will depend on the number of individuals as well as the minimum duration of the financing pool. In every cycle (e.g. weekly or monthly) a user is chosen by lottery and gets the right to get the loan, in other words, the chosen participant is granted the amount of money to buy the property. So, for a group of a hundred participants, the minimum number of cycles is one hundred, to guarantee each user will be chosen once. Implying the users will pay the amount divided over one hundred months.

If chosen, the user should pay in that specific month the same value as the individual initial deposit, and the remaining debt to complete the pot is divided amongst the other participants. The cycle repeats until all the users have been granted the amount.

How I built it

• We developed the main logic of the pool as a smart contract, currently deployed on Kovan network. The smart contract manages the loan pool and interacts with AAVE platform to earn interests.
• The frontend, or the client site, runs on DappHero, as the onboarding platform.

Challenges I ran into

• There were challenges integrating the solidity contract code of aave protocoll and sablier as there werent any packages available (similar to @openzeppelin). Had to remove duplicate definitions across these projects and integrate.
• The frontend interaction with the contract
• The main business logic

Accomplishments that I'm proud of

We are proud of bringing the the Pre-purchase financing pool concept to DeFi context, with a dapp which can directly help people's life

What I learned

• To build a dapp that interacts with contracts on dapphero.
• To interact with AAVE platform usinfg smart contracts

What's next for Decentralized Community Financing

• Handle edge cases
• Add a bidding system
• Deploy on Mainnet

Built With

• aave
• dapphero
• javascript
• solidity