Viaz ICO - First major decentralized peer to peer funding platform on Tezos
The VIAZ Platform will connect digital assets, equity, and fiat in ways not previously possible due to boundaries inherent in the traditional centralized banking space. The VIAZ Platform will bring the world closer by dismantling these boundaries and empowering individuals to take control of their own financial destinies.
Problems with current system
“The root problem with conventional currency is all the trust that’s required to make it work. The central bank must be trusted not to debase the currency, but the history of fiat currencies is full of breaches of that trust. Banks must be trusted to hold our money and transfer it electronically, but they lend it out in waves of credit bubbles with barely a fraction in reserve. We have to trust them with our privacy, trust them not to let identity thieves drain our accounts “(1). –Satoshi Nakamoto, Founder of Bitcoin
Banks are the major source of debt finance for both households and businesses, accounting for about three-quarters and two-thirds respectively of all debt finance provided to those sectors (2). Borrowing money from banks is neither an easy nor a fast process. Credit score, work history, and debt-to-income ratio are just a few of the many qualifiers utilized to assess credit worthiness. An applicant with a low credit score, and less than twenty percent for a down payment, has a high probability of declination. This doesn’t necessarily mean one can’t get a mortgage, but a loan seeker may need to apply to lenders who cater to borrowers in the subprime category. Subprime borrowers have to pay higher interest rates and fees because traditionally there is greater risk of foreclosure for the lender. Job history is an important consideration in an individual’s ability to repay the mortgage. Borrowers working at the same job for two or more years will receive more favorable consideration than someone who lacks longevity in one job, or perhaps works multiple jobs in this current economy. Individuals in this latter category may be asked to provide bank statements to substantiate current and past income history.
After approval is granted, and the monies have actually been borrowed, loan repayment is skewed to favor the banks. Banks charge most of the interest up front, a practice known as amortization. Banks have so established this principle that we as a society go along with it, simply accepting the fact that this is the way things are done. Through amortization, 70% of the total interest is paid by the halfway point of the mortgage period. Only around 35% of principal gets paid. Business loans are more difficult to procure. Barriers include low credit scores, start-up risks, and excluded industries. Even if these boxes are checked, insufficient collateral is often a problem, and as of this writing, no banks accept cryptocurrency as collateral. It is a major concern in
today's evolving economy and opens a new world of opportunity for a blockchain technology such as the VIAZ Platform.
As our society becomes better informed to the advances in technology, individuals are waking up to the capricious control banks exert over their customers. The central banks, reserve banks, or monetary authority manage a state’s currency, money supply, interest rates, and commercial banking systems. The central banks also possess a monopoly over increasing the monetary base in the state and usually also print the national currency. Interestingly enough, back in 1922 Henry Ford said, “It is well enough that people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning” (3).
The Federal Reserve in the United States is controlled by the big banks. They regulate their own industry and manage the money supply. It doesn't matter how hardworking or smart you are, or the amount of money you have, they can devalue your money by arbitrarily printing more of it. Under this fractional reserve system scheme, we inevitably become debt slaves to a ruling class of financial elite.
An example is the crash of 2008. Banks were bailed out by the American people, who in turn became captives of the ensuing debt. It is commonly accepted that the big bank bailout was 700 billion USD that the treasury department used to save the banks. This is far from reality. The Special Inspector General for TARP’s summary of the bailout indicated that the total commitment by the government was 16.8 trillion USD. JP Morgan, Chase, and Goldman Sachs worked with hedge funds to bet against the toxic mortgages after the crash had begun. They made money by selling short on the financial catastrophe they had created. JP Morgan was fined $296.9 million and Goldman Sachs was fined $550 million for their conspiratorial actions (4).
On a day-to-day basis, customers contend with challenges from the very entities entrusted to protect an individual’s wealth. High fees are just the beginning. In countries like Canada and the US, a single wire transfer can cost up to $40 USD. It becomes understandably onerous and therefore difficult for many people to wire money. International wire transfers can be even more cumbersome. Due to security matters, banks can dictate that one must visit a branch in person to complete a wire transfer, which is a problem if an individual is residing or traveling outside of the country where there bank is domiciled. High draft and money order fees are also challenges consumers face. This makes it difficult for a small business owner to survive when these drafts are necessary to conduct business. Putting drafts and cheques on a five day minimum hold is not
acceptable, either. It seems the banks have forgotten that it’s our money on deposit and are overcharging us for the privilege of banking with them.
The VIAZ Platform
The utility of the VIAZ Platform is to provide a decentralized platform for the introduction of prospective lenders to prospective borrowers, connect its users, and act as a conduit between the cryptosphere and fiat currency.
Our first steps in this direction, borrowing and funding, have already begun. Despite its inherent flaws, the traditional banking system works. Within the crypto lending space, other platforms currently exist, each with their own utility and functionality. The VIAZ Platform’s aim is to improve upon, and provide a multitude of utility and functionality under one platform. By the time our Token launches, the VIAZ Platform will have a working prototype. The betanet will launch before the Token Launch, and the launch of the mainnet will occur shortly thereafter. The VIAZ Platform will be fully functional at this time.
Despite recent consolidations in the market space, the crypto-community continues to grow larger with each passing month. Community members want to retain their digital assets, and desire to participate in ICOs. Traditionally, ICOs have accepted mainly BTC and ETH. Starting with the VIAZ Platform we believe that future ICOs will also accept Tezzies (“XTZ”), the native token of Tezos, as the Tezos mainnet is set to launch in Q3, 2018. The VIAZ Platform will empower users to pledge their digital assets and borrow cryptocurrencies to participate in ICOs. The Tokens and XTZ tokens will be used initially, followed by Bitcoin and additional altcoins to be added in future VIAZ Platform updates.
Account holders on the VIAZ Platform will use their cryptocurrency as collateral to borrow fiat currency. Borrowers will have to pledge crypto in order to post the loan. This also gives people an opportunity to lend crypto and fiat at a higher rate of interest. Each time a loan is posted, a VIAZ Smart Contract is created by the VIAZ Platform and recorded in the Tezos blockchain ledger.
All users are automatically issued a crypto and fiat wallet when they sign-up on the VIAZ Platform. This will allow users to securely manage their portfolios independently. It will also facilitate the transfer of funds on and off the VIAZ Platform. Individual wallets will allow users to send digital currency in a virtually frictionless manner. It will also offer what we believe to be a safe and secure means of storing their cryptocurrency.
It is our plan that borrowers on the VIAZ Platform will be issued with 'VIAZ'-branded debit cards that will be operated by a licensed bank and not by the Company. These cards will be used globally on established debit card payment processor networks. Individuals will be able to select daily and monthly limits on their respective cards. Additionally, users will be able to disconnect cards from their VIAZ Platform accounts in case of a lost or stolen card without having to contact a third party for assistance. VIAZ is actively engaged in conversation with at least two different fiat banking partners
These features will be available on IOS and Android operating systems. Mobile apps will be available to VIAZ Platform users free of charge and will make day-to-day VIAZ Platform operations more accessible.
The VIAZ Platform will give lenders the opportunity to bid on funding opportunities based on different interest rates. For example, a borrower can ask for $5,000.00 at 12% per year. It might take a few hours or days to fill the order, but if one lender wants to fund the loan at a higher rate of interest, they will be able to do so instantaneously. This makes the process faster for the borrower, and the lender will have an opportunity to earn more interest.
Interest on all funding will be paid back linearly. Rather than adhering to amortization methods utilized by the traditional banking industry, the VIAZ Platform will implement a linear repayment methodology. Previously noted, the long-established amortization method of interest repayment involves front loading of the interest payment, while the majority of the principal isn't repaid until the end of the loan term. By utilizing a linear repayment method, interest will be divided evenly throughout the duration of the loan. The beauty of this methodology is that it allows the borrower to build equity faster while the lender is still getting the same amount of interest. An example as follows:
The VIAZ Platform will not require sign-up fees from its users, nor will there be monthly maintenance or other hidden fees. The VIAZ Platform will instead charge a small percentage of the interest in the form of Tokens in order to maintain itself. The VIAZ Platform plans to roll out other innovative modules on its platform as mentioned in our roadmap. Usage fees associated with these future services will also be charged in Tokens, thereby contributing to the utility of the Tokens.
The Tokens are the native token of the VIAZ Platform. Token holders are rewarded with monthly airdrops based on their participation in the following Platform Related Actions (or “PRAs”):
1) Using Tokens as collateral for loans
We want to allow users to utilize their Tokens as collateral for loans on the VIAZ Platform. To incentivize this activity, Token-backed loans will incur a reduced service fee (currently this is a 50% discount, although this may change in future). The use of Tokens as collateral will also reduce the available supply of Tokens on the market.
2) Selling Tokens through the VIAZ Platform
VIAZ Platform loan repayments are made of three elements – payment on the principal, interest payment and a service fee. The interest payment and service fee must be paid in Tokens (at the fiat equivalent value at the time of the repayment). This generates a demand for Tokens, as borrowers will need to own and/or acquire Tokens to meet their monthly repayments.
To assist with this, the VIAZ Platform will allow Token holders to create sell-offers. Users will be able to set the desired price (in USD), and stake any amount of Tokens they wish. This provides instant liquidity, now borrowers aren’t burdened with the hassle of having to acquire Tokens; they can simply make the full repayment in fiat, using the VIAZ Platform to automatically acquire the required Tokens behind the scenes.
VIAZ Service Fee
The service fee is a small percentage added to the loan interest rate. Currently this fee is 1% p.a. (but is subject to change). Once received, this service fee is utilized in three ways:
The two PRAs of Tokens (explained above) are crucial for the VIAZ Platform, as they assist with liquidity, provide value to holders, and will allow Tokens to be utilized as a form of collateral. Because of this, we want to constantly reward users for participating in these PRAs – this will be achieved via monthly airdrops.
Airdrops will be sent to users who have engaged in one of the listed PRAs and have passed our AML and KYC policies and procedures, and will be based on the number of Tokens used. Specific details of this calculation are still in progress, but we want to reward users accordingly.
Lenders will not have enough fiat or crypto to bid on all the loans available for funding, which in turn will disseminate the risk between lenders utilizing the VIAZ Platform DAPP. To further minimize the risk, the VIAZ Platform will require borrowers to post collateral in the form of cryptocurrency as previously mentioned. Due to the decentralized model of the VIAZ Platform DAPP, funder and borrower will decide the terms for the loan independent of the VIAZ Platform. The VIAZ Platform will track the valuations of all crypto assets held in VIAZ Platform wallets in real time. In the scenario where the collateral amount starts to fall below the agreed upon threshold, auto-generated alerts and reminders will be sent to the borrower. If no further action is taken to eliminate the risk by the borrower, auto-liquidation of the collateral will maintain the appropriate threshold level. Conversely if the value of the crypto assets held in the wallet increases, VIAZ Platform will instantly upsurge the amount of crypto available to the client to withdraw.
We understand that liquidation may be a concern for VIAZ Platform users as fluctuating cryptocurrency markets continue to evolve towards mainstream adoption. To assuage these legitimate risks and concerns, the VIAZ Platform is exploring tools such as insurance backed funding and recommending appropriate collateral thresholds based on current market volatility
Decentralized Account Identity
The VIAZ Platform will utilize the Decentralized Account Identity (“DAI”) – a smart contract standard developed to allow users to retain control of an on-chain identity. DAI provides the end user the ability to regain access to this on-chain identity in the case of a lost or stolen private key.
The DAI provides a user with a completely unique ID, linked to a private key held by the user. The VIAZ Smart Contract allows for a user to recover access to the DAI by completing a “recovery process”. This requires a user to answer recovery questions that are set during account creation, and can also require their Personal Network (explained below) to verify the recovery process. This process re-links the DAI with new set up keys.
The DAI is an important aspect of the VIAZ Platform, as it makes the application user friendly. Currently, a major fear with blockchain related projects is that a user can permanently lose access to their accounts if they lose or misplace their private key, or if it is stolen or compromised. The VIAZ Platform DAI removes this constraint by securing and maintaining the IDs within a VIAZ Smart Contract.
In the future, further functionality and identity verification features will be added to the DAI, as the standard being utilized will be extremely modular. This allows for 3rd party modules to be deployed and used. The DAI will also hold all XTZ, USD and other tokens associated with a given user (either within the VIAZ Smart Contract, or some cross-chain/off-chain solution).
More information regarding the storage of encrypted data, the process of recovery, and the script for the smart contract will be outlined in the technical paper.
The DAI will utilize a network of linked accounts, the Personal Network, which represent trusted friends, families and other users (e.g. attorneys) that are selected by a given user. This network will be used to verify recovery requests (if activated), as well as beneficiary actions (explained below).
The users within the network can be changed from time to time as required by the user. When a Closed Network is unable to come to consensus on an action (e.g. if some users of the network think that a recovery request is fraudulent while others believe it to be true), a VIAZ Platform arbiter will intervene to resolve the discrepancy.
Within the DAI, the VIAZ Platform will also utilize a “beneficiary” standard. This allows a user to appoint a beneficiary, which is stored within the DAI smart contract and retained on-chain. If a user becomes deceased, the linked beneficiary account can, subject to satisfaction of the Company's AML and KYC policies and procedures, apply to gain access to the users DAI (and therefore, all the users associated with the cryptocurrency and fiat). The beneficiary process still requires verification by the deceased users' “network” to verify that the user is in fact deceased, and for the beneficiary process to continue.
Know Your Customer
The Company will complete its KYC and AML policies and procedures on each of user of the VIAZ Platform in order to prevent money laundering and terrorist financing. This helps the community in making sure funds are not being used in terrorist or other illegal activities. Fundamentals of KYC, AML and counter-terrorism activities are similar across multiple jurisdictions. Currently, a framework of regulations for cryptocurrencies and decentralized lending doesn't exist, but the VIAZ Platform is preparing for the future and planning accordingly.
Why on the Tezos blockchain?
Tezos is a new blockchain that explores new ideas and systems to deliver a safer, more robust chain. Built on OCaml, a functional programming language used for other financial based projects, Tezos implements a delegated proof of stake consensus method. This is more power-efficient and provides a stronger consensus mechanism than the proof-of-work (which is currently in use by Ethereum and Bitcoin).
Tezos is also looking to implement a self-amending ledger, allowing XTZ holders to vote on improvements and changes to the blockchain source-code, reducing the risks of a fork. Tezos will also look to run at a higher transactions per second allowing it to be faster than both Ethereum and Bitcoin, thereby providing users with enhanced scalability and more expeditious liquidity.
Tezos has also designed a new smart contract language – Michelson. This is a strongly typed bytecode language with a very strict set of operations. This forces extremely safe Michelson smart contracts, and could have prevented many of the issues that occurred with other smart contracts (e.g. the DAO). On top of this, smart contracts can also be formally verified, allowing developers to provide a mathematical proof of the outputs and changes a smart contract can make.
Early contributors will have their segment sealed and will be unable to sell, transfer or dispose of their tokens for 12 months after the launch of the mainnet. Similarly, private sale investors will have tokens locked for 18 months from mainnet launch. VIAZ team and founders will have their share of tokens vested over a 24-month period. They will have access to 50% of the tokens after 12 months and the remaining 50% after 24 months from mainnet launch. Team’s percentage will be distributed in their respective divisions: development, marketing, and advisory.
The VIAZ Platform's founding members have been working fastidiously towards this platform since 2014. Active in the crypto community since the inception of Bitcoin, they realized early the fundamental need of a digital platform to enable access to loans. Having a great concept, the founders did not want to fast-track the process by getting someone else to fund the project at that time and potentially steer away from the core mission of the VIAZ Platform. It took the founders an additional two years of due diligence to better understand the market and secure the capital for the VIAZ Platform.
We did not want to come out with just an idea, which is common in the current crypto space. The goal was to have a verifiably working core platform at the launch of the Token Launch. To ensure key milestones are being met in a timely manner, we have added some of the brightest and most innovative minds in blockchain technology to the team.
Presently, we are testing the VIAZ Platform on its zeronet. We are thereby working on the VIAZ Platform's beta version which will be made available to the community to start taking advantage of the VIAZ Platform. The first order of business is to provide a borrowing and funding vehicle for its users. This goal will be achieved by the Token Launch in 2018. By Q4 2018, we will work towards including Bitcoin and other altcoins on the VIAZ Platform for the wider adoption of the VIAZ Platform. In this quarter, we will also work on adding the feature of 're-loan'. This will help lenders exit a loan before the end of the loan term, regardless of the reason.
We have substantial plans for 2019 and will look to begin the year with the introduction of real estate funding and title owned assets utilizing the Tezos blockchain technology. This will help facilitate the growth of the VIAZ Platform. It is our intention that the VIAZ Platform will be providing its users with accelerated, on platform liquidation in year 2020. We hope that the VIAZ Platform will have another banner year in 2021 as the team prepares to introduce remittance. In 2022, the focus will be on connecting users with online payment systems utilizing their VIAZ Platform accounts.