The small and medium enterprises (SMEs) are regarded as the backbone of the economy, being the main contributors to employment in emerging and developing countries. Despite their value, access to finance is relatively limited when comparing to large firms and is a significant driving constraint for SMEs.
This financing restriction is because of SMEs nature that tends to be informal, have less publicly accessible data, and operate in unfamiliar sectors which results in higher information asymmetries and risk, and often, these businesses also do not have sufficient assets that can be utilized as collateral.
As the credit gap is still existing and growing, the incumbent initiatives are not likely to cope with the financing dilemmas, so a different approach is needed. The decentralization of lending, and the advanced disruption to financial services, therefore, looks set to proceed to narrow the credit gap for SMEs, and these all characterize the solution called the Debitum Network.
Disrupting The Financing Sector
By developing a decentralized blockchain based ecosystem, Debitum Network will positively solve the financing concerns of small and medium enterprises. The system connects SMEs in a secure, and effective way and allowing them to utilize its power without a need for an intermediary. It also unites borrowers, lenders, insurers, risk assessors, and all those associated to the financing sector in one user-intuitive platform.
The entire project is placed on the Ethereum network and powered by Debitum (DEB) tokens. It utilizes smart contracts that make Debitum Network secure, transparent and efficient. It also operates as a decentralized ecosystem for parties globally to engage in every step of the financing process, consequently enhancing competence and reducing costs.
Instead of just giving financing options, Debitum also provides opportunities for business in the financing enterprise to access the global market without concerns.
A Unique Lending System and Processes
The financing process of Debitum was deliberately formulated to guarantee all parties are compensated in a fair, transparent, and efficient transaction system.
First-time users or borrowers are pre-qualified by the platform to ensure compliance and that their loan requests are real. After the verification, borrowers will issue a loan application where they can choose the kind of asset to receive from investors. The asset is then reviewed to see if it correspond to the loan application while risk assessors perform their part by double-checking the loan request, the available collateral, as well as providing suggestions on the financial features of the loan.
Debitum has an integrated insurance system depending on the type of loan which can be adopted to protect future investors from loan defaults as well as guaranteeing the credit is partially or fully paid in worst-case scenarios. When all is prepared, investors have the option to fund one or more loans with the data available such as the trust rating system. Also, investors who’ve financed loans can utilize the secondary market to liquidate their investments quickly. They additionally have the option to sell their current loan investments to interested investors; the rights of sold loans are then assigned automatically to the new investors with smart contracts.
Debitum’s ecosystem encourages the full payment of loans, but in the case that a loan is not returned on time or breaks the agreements, the debt collection process in Debitum will cover the losses of the investor. Insurance holders are compensated immediately while the platform’s debt collection team moves forward in reclaiming the loans from the borrower. After the financing process, the trust rating system is updated automatically by smart contracts.
The Network’s Operation
DEB as Debitum’s official utility token is utilized as the mechanism for borrowers or investors to access the services on the platform such as risk assessments, acquiring insurance, and even debt collection. A trust rating system is also integrated inside the platform which is essential for all financing process.
All activities in the platform are connected to smart contracts that influence a party’s trust rating depending on the result. It keeps a healthy ecosystem for users as low-quality parties are naturally avoided and removed from the community. To prevent service providers from rendering less than satisfactory services at the start, they are obliged to freeze a particular amount of tokens as a guarantee to produce quality service to the platform’s users.
Debitum also has a hybrid approach that enables the smooth integration of fiat-crypto infrastructures which guarantees that as the adoption of cryptocurrencies increase, Debitum Network will be capable of adapting and offering its services in both fiat and cryptocurrencies seamlessly.
Recent Update And Development
The Debitum network launches its innovative platform known as Abra 1.0 with an investment portfolio of nearly 1 M EUR on September 3, 2018. Its hybrid ecosystem connects the gap between the crypto and ‘real-world’ lending. Blockchain technology, by utilizing the network’s Ethereum-based DEB crypto token will deliver speed together with end-to-end integrity and transparency in the platform’s internal activities while loans are granted in traditional fiat currency.
The CEO of Blockchain Center Vilnius, Eglė Nemeikštytė, considers that speed, efficiency, and commitment Debitum has presented in bringing its product to market are excellent examples to other fintech startups:
“Debitum Network was the first in the Vilnius Blockchain Center community to show blockchain applicability in the fintech industry, and were the fastest to raise capital and launch their product,” says Nemeikštytė. “They proved that blockchain fintech projects can keep their promises, stick to deadlines and be efficient.”
Abra 1.0 earned a positive response from partners, early investors and key personalities in the blockchain society at an event in Vilnius on August 23rd that contributed a hands-on chance to try out its services. These comprise a central dashboard on which investors can trace their investments, see how much money they have produced, and see potential investment opportunities, ordered according to risk. They also have a live demo page for interested users and test the efficacy of their newest system: Abra 1.0 Live Demo
Debitum Network co-founder Martins Liberts expressed his confidence in the platform:
“Debitum is about allowing small business owners and entrepreneurs to be in charge of their future,” stated Liberts. “We’ve done it in around six months, and we’ve done a lot of testing. We have trust in our product, and we’ll be joining the ranks of those few ICO projects that have already delivered a real product.”
Also, the Lithuanian Vice Minister of Economy Elijus Čivilis in attendance emphasized the importance of solutions like Debitum’s in tackling the global issue of access to finance among small businesses.
The Debitum team has said that they are already at work on version 2.0 of the platform and is scheduled to operate out in 15 countries by 2019. For complete specifications of Debitum Network’s platform features, development, and team, they have summaries and available Whitepaper to view.