Gy heads up Partnerships and Marketing at EthicHub and was kind enough to join Aave Grants for a deep dive Q&A on Project MiniMice, an Aave bounty winner from ETHLisbon in 2021. Keep reading below to learn about Project MiniMice and EthicHub, how they leverage Aave, what Stani said that inspired them to start building and much more.
Q: What is the name of your project and what are you building?
For the EthLisbon Hackathon 2021, we built a project called MiniMice, where we won Aave’s 3rd place Prize. This project would allow our users to invest in yield bonds for a shorter time frame resulting in a varied APY (the longer the bond maturity, the higher the APY). The Yield bonds would be collateralized by our token $Ethix and would be NFTs which would allow our users to trade them to other users should they need their capital back.
Up until now, EthicHub lenders only received returns on their investments annually and the defaults (<1%) were fully compensated by selling Ethix from the compensation system which remains overcollateralized. You can see this in today's statistics, showing <1MUSD outstanding debt and >20M in the compensation system.
Q: Can you share more about EthicHub?
Our project bridges the gap left by the current financial system: 1/4 of the world population is excluded from it. Through EthicHub, we enable small holder unbanked farmers to gain access to capital at affordable interest rates. Indeed, the local interest rates are way above what is reasonable, ranging from a 100% interest rate all the way up to 140%.
Potential lenders are able to lend their money to those farmers and get an 8% return on their investment. Through our compensation system, we created a collateral in Ethix to the lenders’ investment. The collateral is provided by the Compensation Reserve and the Loans Originators and our stakers of Ethix. Stakers receive a higher return on their Ethix as higher risk is associated with their operations. In the case of payment default of a project, to repay the lenders' money, the Ethix provided by stakers could be put at risk.
Since being operational in 2018, we have less than 1% default; meaning all of our stakeholders (farmers/lenders/stakers/loan originators) have gained from our system. This project, EthicHub, is the first of its kind. It differentiates itself from others as it not only connects DeFi to the real world but also betters the lives of the people it interacts with. In addition, our project responds to 9 SDG goals.
Q: Where did you first get involved in the Aave ecosystem?
Back in 2017 Aave whitepaper inspired us and in 2019, we met Nolvia Serrano when visiting Spain and in 2020 we were already using Aave to leverage both personal and project crypto funds. In EthCC Paris we met Stani, Hadrien and some other team members. Later in 2021, during the EthLisbon Hackathon, we won 3rd place for the Aave Grants.
Q: What attracted you to build on Aave?
In his presentation at ETHcc Paris Stani said the next thing in DeFi will be to bring back to the real world part of the money that has been coming to DeFi and he mentioned there are two ways to do so: tokenizing real world assets to be able to use them as collateral or simply to use credit scoring models and lend without collateral. Since our farmers don't have data to provide credit scoring, nor assets to be tokenized, we had to find a third way. We call our solution “crowd collateral” and it consists of creating a Compensation System based on our token (the Ethix) that people buy to bet on new credit Originators (any entity that works with the base of the pyramid, typically farmer cooperatives or agritech projects).
We see, in credit delegation, a solution to leverage our project on Aave’s ecosystem.
We were very inspired by the success of Aave switching from p2p to liquidity pools solution. From there, we decided to focus on crowd collateral and delegate the lending activity to Aave. We believe this would exponentially scale our solution: by providing collateral to these small farmers with our system and creating a lending market on Aave leveraging credit delegation, we think this could be an inflexion point in the history of financial inclusion.
Q: How can anyone reading get involved today?
Our project will continue to flourish with more people like yourself entering in it and participating in our projects. To best help us, you could come to our platform and try it out for yourself, all feedback is welcome and appreciated. Here are the links:
- our website
When you invest in a project either via your credit card or through xDai, you are providing money to help out the farmers in their respective projects. In this case, you are considered as a lender and are subject to earn at least 8% on your investment. When you buy Ethix, you are providing collateral to the investments of the lenders. In other words, you are giving an insurance to the money lended*. Here you are seen as stakers.
*Depending on where you stake node or protocol, your yield % will become greater as your risk steepens.
Then of course following us on our socials is always the best to stay updated in our developments. Here are our links:
Q; Anything else you want readers to know?
First, we are building Yield Bonds. EthicHub’s yield bonds are NFTs minted by a smart contract. The smart contract allows the users to choose the capital they wish to invest and the maturity. It then mints an NFT holding within it the capital of the user and Ethix. Each NFT holds 5 times more Ethix than Dai as a way to further compensate the lenders in case of default and provide incentives for the lenders to buy the yield bonds. We are currently working on the Phase 1 of our yield bonds. In the future, those yield bonds will have additional features that are not present at the time of this writing. The three bonds we plan to commercialize hold the following characteristics:
9% in DAI for 1 year maturity
8% in DAI 6 months maturity
7% in DAI 3 months maturity
Interoperability: These yield bonds being NFTs will enable users to exchange them between each other.
Over-collateralized by 5X: for each 1 DAI invested, 5 Ethix are put as collateral by the compensation system
Yield bonds will help EthicHub in its path to become further decentralized, the allocation of capital held within the yield bonds will be distributed by our commuter agent contract. It will automatically allocate the capital provided by our lenders to projects in need of funding.
In the long term, EthicHub’s vision is to gamify the investment. We want to build a Farmville that serves real world farmers powered by our users and supporters.