Goldfinch is a protocol building one of the biggest missing pieces of DeFi: loans without collateral. Authors believe this is the crucial step that finally opens crypto lending to the majority of the world. By decentralizing the process, DeFi can unlock an entirely new layer of underwriting capacity by allowing anyone to be a lender, not just banks.
How it works?
The protocol works by extending credit lines to lending businesses. These businesses use their credit lines to draw down stablecoins from the pool, and then they exchange it for fiat and deploy it on the ground in their local markets. In this way the protocol provides the utility of crypto — specifically, its global access to capital — while leaving the actual loan origination and servicing to the businesses best equipped to handle it.
On the investor side, crypto holders can deposit into the pool to earn yield. As the lending businesses make their interest payments back to the protocol, they’re immediately disbursed to all investors.