Building a fair (token) economy

With Latin America’s informal workers

On March 24, we got our feet wet in our first case study of the DWeb Learning Journey with Mercedes Bidart and Viviana Siless, co-founders of Quipu Market. Quipu is disrupting the micro-finance model as we know it, by leveraging web3 to ensure entrepreneurs in the informal sector can access capital quicker, more easily and at much friendlier rates than traditional micro-finance. You can watch the full recording here. Here are a few of the highlights:

Affordable loans for informal workers

At its core, Quipu serves entrepreneurs who run informal business out of their homes across Latin America. Informal entrepreneurs make up 60 percent of the economy, and yet 90 percent of them are excluded from accessing formal loans because of a lack of information about their credit history. Quipu is out to change that. Here’s how:

Applying token economics to affordable loans

The Quipu marketplace makes the economic outputs of informal entrepreneurs visible for the first time, and this in turn allows the Quipu team to build an alternative credit score system based on which they can make loan decisions. But where will the money for these loans come from? Quipu plans for the micro-loans to come from you and me – creating a new liquidity pool to draw from. And this is where tokens come in. Investors buy a token, whcih is pegged to the Colombian peso so that micro-entrepreneurs can get real cash fast and at affordable rates; and in return investors receive an interest bearing token that is exchangeable on the Quipu platform. Here’s how that works:

Mutualizing loans & risks

Why not just do a crowd-funding campaign? Wouldn’t that just get cash into the hands of entrepreneurs more quickly and simply? Mercedes Bidart answers this question and talks about the benefits that comes from mutualizing loans (and risks).

This is also radically different from how micro-credit works in part because loan decisions take days, not months.

From tokens to decentralized governance

Micro-entrepreneurs get rewarded with tokens when they pay back their loans, or even make investments in fellow entrepreneurs on the Quipu platform. The ultimate goal is for these token holders to become a tool for decentralized governance in the near future. Quipu entrepreneurs who own governance tokens will gain decision-making power over the lending protocol.

Jump in!

Mercedes & Viviana ended with a bit of advice on how to get started with DWeb. In essence: don’t be intimidated – your real world expertise and knowledge of the problems and communities at hand are your core asset. Start digging into Discord groups and ask lots of questions.

The DWeb learning journey is convened by Ashoka & Mutualist Society. Learn more!