There are different financial scenarios all over the world, and the need for credit solutions are quite different depending on the context. However, traditional credit services are not offering that many alternatives for these scenarios. Financial institutions usually offer limited options for restricted regions, so people are the ones who have to adapt to the institutions demands, and not the other way around.

To offer a real global credit solution, financial services should be able to adequate to each one of these scenarios.

Ripio Credit Network, a global peer-to-peer credit protocol based on smart contracts, will connect lenders and borrowers all over the world -regardless of currency- via RCN tokens (payment channel), adding the figure of the cosigner: a local network agent that will be able to gather the credit risk information and manage the collection of the borrower’s debt in case of a default.

We’ll now describe the different types of loans that will work within the RCN network, once the network is deployed to the RCN MainNet this November.

RCN loans will be settled under a combination of three different variables:

Type of repayment / amortization:

a. “Bullet” loan: one payment only (no installments).

b. Fixed / “French” loan: a fixed number of installments.

c. Variable loan: a percentage or fixed amount of variable installments.

2. Interest rate:

a. Fixed

b.Variable

c. Mixed

3. Type of cancellation:

a. Voidable

b. Non-voidable (note: the borrower has the chance to equal out the loan by repaying the total number of installments but not the balance).

RCN credit tickers

Following these variables, a credit ticker will be created to identify each type of credit loan and set a credit standard for future loans. Each ticker will include a set of parameters to identify different kind of loans and will be referenced like this:

RCN + Amortization + Rate + Cancellability

Each variable has a default value but it doesn’t need to be necessarily apparent. Here are some credit ticker examples:

RCNB (a “bullet” RCN loan): a loan with no amortization due to it’s single payment procedure. It has a fixed interest rate by default and also it’s non-voidable by default.

(a “bullet” RCN loan): a loan with no amortization due to it’s single payment procedure. It has a fixed interest rate by default and also it’s non-voidable by default. RCNF_ca (a fixed-installment RCN loan): a loan with a fixed number of installments (“french loan”). It has a variable interest rate by default and it’s voidable.

(a fixed-installment RCN loan): a loan with a fixed number of installments (“french loan”). It has a variable interest rate by default and it’s voidable. RCNF (a fixed-installment variable-rate RCN loan): a loan with a fixed number of installments (“french loan”). It has a variable interest rate but it’s non-voidable by default.

(a fixed-installment variable-rate RCN loan): a loan with a fixed number of installments (“french loan”). It has a variable interest rate but it’s non-voidable by default. RCNVG_ca (a variable-installment RCN loan in geometric progression): a loan in which each installment is a fixed percentage of the previous one. It has a fixed interest rate by default and it’s voidable.

(a variable-installment RCN loan in geometric progression): a loan in which each installment is a fixed percentage of the previous one. It has a fixed interest rate by default and it’s voidable. RCNVA (a variable-installment RCN loan in arithmetic progression): a loan in which each installment is equal to the previous one plus an extra fixed amount. It has a fixed interest rate by default but it’s non-voidable by default.

The first RCN credit exchange, that will be launched next week by Ripio in Argentina, will then manage the loan characteristics according to:

Credit ticker : Indicating the type of credit loan.

: Indicating the type of credit loan. Loan parameters : Indicating the amount, interest rates, repayment frequency, etc.

: Indicating the amount, interest rates, repayment frequency, etc. Borrower : Setting the country, loan destination, credit scoring, type of currency, etc.

: Setting the country, loan destination, credit scoring, type of currency, etc. Providers : Setting the wallet provider, ID verifier, scoring agent.

: Setting the wallet provider, ID verifier, scoring agent. Cosignature: Indicating the risk degree assigned to the cosigner agent.

By gathering all this information and adding it to its smart contracts, the RCN protocol helps to diversify the credit risk and handle specific tools for the cosigner to manage the credit collection in its jurisdiction.

Ripio will implement the RCN protocol as its first use case to provide guidelines on how to start to interact with it, so future agents could use it as an example.

Detailed RCN loan use cases

Pedro is a Mexican citizen who works in construction receives a salary per fortnight. He got used to going to the supermarket once every 15 days, he gives money to his two children every 15 days, who also know that once a fortnight they have cash to go out.

In this context, Pedro wants to change his car and needs credit. He would prefer a fortnightly loan but his bank just offers monthly loans so he ends up taking one.

With RCN, Pedro could opt for 6-month loan, paying a fee in every fortnight.

* amount: MXN 120.000, term: 6 months, fee: annual 10%, repayment frequency: 15 days.

2. On the other side of the world, Vinh (a Vietnamese entrepreneur who needs money to start a new project) knows that in only 3 months his project will start to be profitable. Therefore, he decides to take a monthly loan, even though he knows that during the first months it will be very difficult to make ends meet.

Vinh could opt for a “bullet” credit, using the loan to carry out his project and repay the whole loan after 3 months.

* amount: VND 615.000, fee: annual 14%, term: 3 months.

Or else, Vinh could opt for a fixed-rate loan with a deferral of 3 months. By doing this, he would still have a “grace period” and then begin to repay in fixed installments.

* amount: VND 615.000, fee: annual 14%, term: 6 months, deferral: 3 months.

3. Bruno is Argentinian young graduate who lives under an inflationary context, has some savings and wants to buy his first apartment. The bank offers him a 12-year loan as long as the installments don’t exceed his monthly income by 40%. Bruno knows that his monthly income is good but also knows that it will increase according to the country’s inflation rates. However, given his current income, the maximum amount offered by the bank is not enough to purchase his new home.

Bruno could overcome inflation by taking a credit in increasing installments under a geometric progression at a constant rate. This way, fees would maintain a more or less constant relationship with his income and the rest of his expenses.

The last installments of his loan won’t be that modest but, as a counterpart, the first ones would be much lower.

* amount: ARS 400.000, term: 6 years, rate: annual 20%, annual installment ratio: 15%.

Ripio Credit Network seeks to improve lending conditions for both lenders and borrowers all over the world and rise above the solutions offered by the traditional credit system and peer-to-peer loan services alike.