Dear readers and members of the EthicHub community. This article will explain the recent updates we have implemented in our Whitepaper.

Changes in White Paper and Token Paper

Once again EthicHub has greatly improved thanks to the huge feedback received from people around the world. It is wonderful to count on an active and engaged community to build solid foundations for our project. We have attempted to include all the feedback into EthicHub official documents, we are going to briefly describe these changes. As always, all feedback is welcome (use the channels posted at the end of this article to get in touch).

Introduction to the challenge Ethichub takes on

Our advisor PhD Maricruz Lacalle (Universidad Autónoma de Madrid) has significantly enriched the introductory part. We recommend you read this section in order to understand why the lack of capital in developing countries is one of the biggest problems in the world and how EthicHub, by using Blockchain, can solve this.

Philosophical Layer

Every project has a technological layer, a business layer and a philosophical layer: EthicHub has a solid technological layer by applying Blockchain to the most evident case of use; It has a strong business layer because it focuses on two sectors with exponential growing capabilities: P2P crowdlending and the unbanked — the population segment about to go through the biggest economic growth, with a volume difficult to calculate but exceeding one trillion dollars. But EthicHub wants to keep the focus on the philosophical layer, to be coherent with our mission and our values and always watch over the positive impact of the borrowed money, which should serve to improve productivity, diversify production or improve the farmers’ trading conditions.

By following this link you can read more on the subject.

Developing Reputation System

In order to give this system a solid structure we need to build strong trust relationships, so the farmer communities can work with the rest of the world. We have created a reputation system to rate the communities and Local Nodes that select them.

For further explanations read the article by our Tech Node Raúl Martínez here.

Decentralised Audit

To prevent the system from corrupting over time (e.g.: Local Nodes or our own teams becoming corrupted and asking commissions outside the EthicHub system) it is essential to promote a decentralised audit system.

This Audit System will be based upon participants from our own community. It is intended to verify the good will of each part and also to act as an EthicHub marketer (promoter), creating visual content, and sharing their experiences with the rest of the community to provide them with proof of the positive impact of their lending.

Our proposal in order to carry out these Decentralized Audits are the EthicHub Ambassadors. People who are able to promote the project and attract enough investors to cover the costs of their field trips and to perform the Positive Impact Evaluation Methodology designed by Universidad Autónoma de Madrid. Our Ambassador program is currently being created and will soon be published.

Our Ethichub platform lenders will be eligible for audit tasks too, but these need to be carried out on non-profit basis, because paying for this service would reduce profit of both lenders and borrowers.

Crypto to Fiat Exchange

In the first stage of the system, the representative of the farmer community will need to open a bank account and a crypto coin exchange account. He will receive the funds in crypto, change them into his local currency and transfer them to his personal bank account. The loan will be nominated in the borrowers’ local currency. The exchange rate will be determined by a third party oracle straight to the Smart Contract.

In a second stage, thanks to our partnership with Mobilum, borrowers will be able to directly dispose of crypto from their own wallets by paying at any shop accepting Visa, without the necessity of a bank account.

In the third stage, decentralized exchange points like the ones being developed by Dether will be installed in the farmers’ villages and even avoiding the involvement of Visa credit cards.

From the Whitepaper: “Projected Working System”

Trading products aligned with EthicHub`s vision

Manufacturers that are aligned with the vision and values of EthicHub will be able to offer farmers the possibility of directly buying products that help them to increase productivity, improve quality, diversify crops or improve their marketing conditions.

Improvements In Decentralised Insurance Policy

As EthicHub is aimed to improve the conditions of unbanked farmers, our strategy cannot be based on token collateralised credits because our borrowers don’t have such tokens. That’s why we propose a Guarantee Fund to mitigate the default risk. Every loan should pay a percentage to this fund to cover in case of default. This percentage will adjust as the default rate evolves on the platform.

EthicHub will also offer insurance for the exchange rate. The percentage to cover for it will depend on the country in which it operates.

Both insurances (default risk and exchange rate) will have the additional support of the Ethix specifically reserved for capitalising such insurance systems, making EthicHub more attractive for a wider scope of investors, who prefer to compensate risk with profitability.

Change in the distribution of tokens

We have reduced the volume of tokens to be sold by dedicating a very significant percentage to the two key points of EthicHub’s success:

10% to capitalise the risk insurance of exchange rate and risk of default, thus making the project more attractive to a wider range of investors.

20% for the global development of Local Nodes and Investor Nodes networks, and to get them correctly incentivised to act according the common interests.

DAI as a means of payment on the platform

We propose some changes on the token system design to mitigate the biggest risk investors have identified; The volatility of a token used as a means of payment can discourage the use of the platform.

Although it has always been pointed out that the benefit is obtained by the profitability in the local currency and that the token is only a means of transport for the Fiat money, it is a fact that if the token increases in value above the interest produced by the Fiat, investors may feel that they are losing money with tokens.

To mitigate such volatility we propose to use the DAI, a stable crypto currency (“stablecoin”) as means of payment. With its implementation we will reduce the resistance to a massive adoption of the platform due to the negative effect of the current cryptocurrencies’ volatility.

New features of the Ethix token

The EthicHub token is designed to incentivise key stakeholders positive behaviour: Investors to invest and refer; Borrowers to pay back; and Local Nodes to select good projects and refer new trustful Local Nodes. It is also designed to mitigate the main barriers to the adoption of our system: default and exchange risks. You can read more about it in our Token Paper that will be realised soon.

Governance

Many people wonder about our material motivation because LendingDev, the society behind EthicHub, does not generate benefits. To provide a clear explanation it is necessary to first understand what a decentralized system is, and how its governance works once such system is implemented, and meanwhile how the governance of LendingDev will be.

LendingDev acts as a non-profit company because all the funds and fees are being reinvested into the development and promotion of EthicHub. We believe this makes the project more sustainable and strong because:

1. It increases competitiveness: because there are no fees for profit to remunerate the capital shareholders.

2. It engages the community: Since the full value of the project goes to the token, users of the platform have no interest in making a fork to get rid of a holding company.

3. It aligns the interest of all stakeholders: EthicHub team only profits from the token’s increase of value (their tokens are vested for 2 years with 6 months cliffs), and the only way of increasing this value in the long term is by augmenting the user base; Users benefit also from the increase of value of the tokens they need to stake in order to become users.

The governance of LendingDev and of the funds granted during the token sales is explained in detail in the Whitepaper as is the whole governance policy.

Adjustments to the Roadmap

As a consequence of all these improvements, the roadmap has been adjusted to incorporate the changes to accelerate the growth thanks to the Local Nodes incentive model that will allow us to scale the model faster than originally planned.