IDO of @bnplpay happening on Sept 14th on @thorstarter

Here are my 'intern notes' about the whitepaper…

Interested to see this one play out.

1) Objective: Create a relatively more efficient method of banking compared to the traditional banking world.
2) Ecosystem information: Comparing both worlds, within the BNPL ecosystem, Node Operators (NOs) are ‘Banks’, BNPL tokens are like bank equity/shares, Stakers are like shareholders. Thus, the more stakers staking tokens, the more equity in the NOs = lower credit risk for lenders.
3. Banking concepts:
a. 20% of interest received goes to NOs (10%) and Stakers (10%), likened to spread/cost of doing business and retained profits to shareholders, respectively.

b. Staked Assets to Liquidity Ratio, essentially is your Solvency ratio (Assets/Liabilities)
4. Target market: Uncollaterialised or more commonly known as unsecured borrowers, presuming both crypto native and non-crypto native (given the example in the whitepaper implied a non-crypto native person
5. Things I like:

a. Once delinquency occurs (on the basis no extensions are arranged), capital losses are realised immediately (rather than provisioned to be written off in future), with the shortfall coming directly from NOs and Stakers (through slashing).
5b. Lenders have liquid pool tokens, as such value is realised in real time. LP tokens are priced according to: the value of their pool - default losses + accrued interest, and can be sold on secondaries (like aTOKEN and cTOKEN)
5c. Sustainable flow of capital thru the ecosystem, borrowers pay with stablecoins, repays capital + interest, smart contract divvies interest to lenders and NOs/Stakers which are Token holders. As such, an intrinsic way of valuing the BNPL token through clear value accrual.
5d. Liquidity mining program to remove the ‘chicken or egg’ problem with lenders providing liquidity
5e. Good alignment of value accrual of NOs with their underwriting quality. They receive all income upon maturity. I.e. not incentivised to write underperforming loans and then leave the network.
6. Things that raise a yellow flag:

a. Combination of KYC requirements + entering the lending/banking environment attracts serious regulatory scrutiny. For those veterans in the group, think SALT Lending platform (Somewhat) in 2018 .
6b. Targeting non-crypto natives is a long term play, adoption is difficult given the steep learning curve and friction for this audience entering the space. Conversely, the reason why DeFi works so well is because it targets crypto-native people and has no regulatory burden
6c. Writing unilateral loans is incredibly laborious, even with loan document templates and has much more friction compared to lending/borrowing pools (e.g. AAVE, Compound).
7. Outstanding questions:

a. Has the team got individuals (e.g. Ex-bankers) or entities lined up to become Node Operators?

b. Any customers who are ready to borrow funds?

c. What type of capital do Lenders need to provide and likewise borrowers need to repay back?
7d. Whitepaper mentioned there will be dashboards NOs can use to manage their book? Are there any wireframes that they can share on what these will look like?

e. What is a fail safe/risk management approach for the scenario if NOs get slashed below 750k BNPL tokens?
7f. Tokenomics - Why convert the 10% interest into BNPL tokens to send to stakers? Why not just send the 10% interest directly to NOs/Stakers?

g. Where is KYC data stored?

h. What programs are running the KYC checks?
7i. What advice/research has been conducted to mitigate regulatory risk (specifically regarding banking/lending regulations)

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