Ripio Credit Network (RCN) describes itself as a global credit network that is built on the blockchain. Using smart contract technology, RCN offers peer-to-peer lending on a global scale and without hefty transaction fees that are a part of traditional banking.
We speak with RCN to learn more about how they aim to disrupt the current credit system.
Can you give an overview of RCN?
RCN is a global peer-to-peer credit network, based on cosigning smart contracts. Basically what RCN does is enable people all over the world to access credit, and to provide loans. It’s a protocol, with smart contracts programmed on the Ethereum blockchain. The RCN token is a typical ERC-20 token.
The way it works is that wallet providers (for example), choose an ID verifier and a scoring agent. And those two agents are going to be the ones to bring information to the consigner.
The cosigner is going to assess the risk of the borrower. Based on that risk, the consigner is going to ask the borrower for an advance on the loan. The cosigner is the one who has to pay the lender in case the borrower defaults.
So that’s pretty much the model. What we do is provide technology for wallet providers (and anyone that wants to integrate our protocol) so that they can allow users to become borrower and lenders. Someone in China can lend money to someone in Mexico, and someone in Brazil could be lending money to someone in Moscow, and so on.
Let’s jump little deeper into these different parts. For the cosigners, what is their financial interest in cosigning these loans?
The cosigner, after getting all the necessary information, is going to have an assessment on the credit worthiness of the borrower. They then add their markup, which is expressed as a percentage interest. And that interest is the final number that the borrower is going to see.
So in that final number you are going to see the interest the lender is going to profit, as well as the amount the cosigner is going to profit as well. So you’re going to have a markup from the ID Verifier, the Cosigner, and the Lender.
That makes sense. Can you talk a bit more about the scoring agent?
The scoring agent is a company like Bloom or Civic. This scoring agent basically assess your credit worthiness. The scoring agent gives you a credit score, and passes that information to the cosigner. Based on that score, they’ll assign a certain amount of advance you need to put up for the loan.
The scoring agent is just a way for cosigners to assess how risky you are as a borrower.
And the last part, the ID Verifiers – can you talk a little bit about these?
The identity verifier are services that make sure you are who you say you are. What level of credit you have, what is your credit history, if you have previous loans, if you’ve fulfilled all your previous payments, and so on.
Basically it’s a background check on your credit history. When we combine the information the ID Verifier provides, with information the scoring agent provides, you get a complete picture about the borrower. Then that information is passed along to the cosigner.
Got it, makes perfect sense. So why did you choose to work with the wallet providers, instead of exchanges or peer-to-peer lending?
We’re open to experimenting with other options. Because of the amount of user wallets have, we believe they fit well into our model. We’re about to release Version 2 of our protocol, which is going to have improvements that make it easier to interact with other kinds of technologies like exchanges.
But wallet providers will likely be our first successful use cases, because their business fits perfectly with our business model.
You mentioned you’re about to launch Version 2 now. Can you talk a little bit about Version 1? What have you guys tested, what are the results, and what have you guys learned from that process?
When we released Version 1, we found a couple of issues while experimenting on our testnet. For instance last year, at the end of the year, there was the Crypto Kitties issue. We found that under certain circumstances, when the network was heavily congested, we couldn’t work as smoothly as we would like.
So our Version 2 is going to solve those problems of congestion. We’re migrating so we’re no longer only going to be an ERC-20 token. We have a lot of improvements in terms of our oracle. We’re also changing technical aspects of our code, so integrations are easier with wallet providers, and so forth. It’s going to allow us to not only interact faster with different wallets, but to talk directly with different blockchains in the future.
Very nice. One last question. Can you walk me through the different smart contracts that are in the RCN network?
We have the main token smart contract, we have the smart contracts that regulate the process by which a loan is approved, and the smart contract where the lender sends the funds to the wallet provider. Then the wallet provider transfers the tokens into fiat currencies, for the borrower.
Is there any thing else you want our readers to know?
This year we’re starting to make integrations much faster. By the end of the year we should hopefully be working with 3-4 big wallets that give us access to millions of users. So please keep an eye out for RCN.