THE CHALLENGE
It is difficult for the many nature-positive small ventures of the most threatened biomes to access to credit in order to scale their solutions.
In addition, financial inclusion has been identified as a facilitating factor for 7 of the 17 Sustainable Development Goals. 1.7 billion adults are still unbanked and inequalities persist, with large gaps across countries, gender, age and social groups.
SMEs are mostly excluded from formal lending despite having an account with a financial service provider. For example, in Latin America and the Caribbean, about 90% of businesses have an account, although only half have a bank loan or a line of credit from a bank.
Scaling trust has historically been the biggest challenge in scaling access to credit.
WEB3 is developing the technological foundations for scaling trust, thus opening the opportunity to scale access to credit.
THE VALUE PROPORSAL
AVALDAO is the first decentralized Reciprocal Guarantee Company. A WEB3 solution that provides “quickly, freely and readily” guarantees to unbanked people and micro-enterprises without a credit history or insufficient collateral, so that they can access credit.
AVALDAO is born native to WEB3 and will build new functionalities as this technology progresses and becomes more accessible. Today avalDAO Smart Contracts provide trust on three levels:
i) Trust in the borrower: in a self-sovereign digital identity based on blockchain, the borrower will build his reputation based on credentials (ratings) given by third parties.
ii) Trust in the guarantee contract: avalDAO’s Smart Contracts are autonomous and immutable contracts that block funds and execute guarantees without intermediaries in favor of the merchant.
ii) Trust in the company: avalDAO’s DAO allows transparency of the economy of the system and programming of risk levels.s