Previously, we have posted the You Asked We Answered Part 1 to answer the introductory phase questions about Colendi. Our intention was to create an as clear explanation as we can in order to explain the vision we have in Colendi. In part 2, we are now starting to dig deeper into Colendi Product. You can see below questions and answers specific to the project and application. We recommend you to read the FAQ posts in the numerical order to better grasp the notion and the methodology of Colendi. If you’d like to read a simpler version of this post you may click here.

Our community is always welcome to reach us via social media and direct us more questions. We will continue to produce FAQ posts to answer your questions as much as we can.

What is Colendi ID?

Colendi ID is the self-sovereign digital identity provided for Colendi users. It adds a layer of privacy and protection to users’ relevant information and data. The identity data that was presented to the Colendi application with the user consent is stored on a distributed database. It is completely decentralized. However, user transactions and corresponding Colendi ID cannot ever be matched by anyone who can access the distributed database. Colendi ID is created and stored according to the DID standards (Decentralized Identity Document) by W3C which means that Colendi ID is compatible with other identity systems and has the ability of being a pluggable identity. It is designed to be flexible to adopt any latest technological enhancements and will remain open to further developments that will take place in the blockchain environment.

The objective of Colendi ID is to serve as a medium for users to share their profile and reputation without being exposed to any lender, merchant, partner or any other third party integrated into or may access the Colendi platform. Our users can therefore feel the liberty to share their Colendi ID whenever they need without.

What is Colendi Score?

Colendi Score is the core of Colendi Protocol’s financial reputation mechanism. It is a utilizable, unique, and secure credit score that is updated in real-time. Colendi users authorize the algorithm to read through their smartphone, social media, Colendi partners’ data to allow it to generate a set of scores which later will become a single Colendi Score, the credit score which will serve as a reliability measurement. Colendi Score is scaled between 0 to 1000 in order to be sufficient at granulating the financial reputation of a person

At the time of usage, all previously read data will be kept private merchants, lenders or Colendi co. can only see the Colendi Score that represents users’ creditworthiness. Consequently, users will access the benefits that Colendi provides such as microcredit, installment shopping, p2p finance etc. their Colendi Score enables.

Transaction history of a person is one of the crucial parts in calculating creditworthiness. However, as an application dedicated to produce a creditworthiness score with the available personal data, conceptually it should also be able to calculate a score in case of a non-existent transaction history in order to provide a solution for unbanked and underbanked. Colendi Score uses diversified data sources including the data generated in the social media and mobile phone.

How will Colendi know whether the user or the merchant is not being cheated?

Colendi implements a Fraud Engine that probes and observes stream or collected data to identify short-term and long-term fraud activities. Quick Fraud Engine is capable of handling both stream data and time windowed data. It detects frauds via both Machine Learning and Rule-Based methodologies. Master Fraud Engine, on the other hand, makes complex checks for both loan and person based anomalies and prevents possible fraud attempts. The goal is to reach the point where all Colendi users can fully trust the protocol and the risks for the lenders are minimized.

See Token Paper for more technical explanation on staking/slashing conditions.

What is Colendi Token?

Colendi Token is a utility token. It is denominated by the ticker COD and serves two utilities:

1) The means of exchange for credit score queries by merchants to issue microcredit or installment shopping to their customers.

2) The token will be staked by lenders and data integrating parties. Smart contracts will include a reward and punishment mechanism as an auditing mechanism that will incentivize all parties to provide quality data.

What is a utility token?

Blockchain technology is an innovation where encrypted smart contracts are transparently communicated through distributed ledgers. A utility token is a type of token which serves a specific function when the token transaction is validated on smart contracts.

Colendi GmbH is based in Switzerland, Zug. Therefore it is subject to the token guidelines issued by Swiss Financial Market Supervisory Authority FINMA. According to FINMA guidelines, Utility tokens provide access digitally to an application or service by means of a blockchain-based infrastructure at the point of issue.

What are the benefits of Colendi for the user?

Banked or unbanked, the biggest advantage of Colendi for everyone is that it provides the opportunity to shop using microcredits and installment shopping. The un/underbanked population in the world is immense for the lack of justice our financial systems can deliver. Colendi bypasses exiguity of financial history of the user since it does not rely on any prior financial information. It also provides an extra security layer for user-owned data… With its propriety machine learning algorithms constantly updating Colendi Score on the blockchain, users gain instant access to microcredit opportunities.

What are the benefits of Colendi for the merchant?

When Colendi users gain access to microcredit and start making purchases that they weren’t able to afford before, merchants will experience a spike in their sales and enjoy the exclusivity of our partnership. As merchants gain access to customer’s with better financial reputation thanks to Colendi Protocol, they will consequently start selling goods and services with installment options.

What are the benefits of Colendi for the lender?

Under current circumstances in many countries, the accredited lender institutions go through a lot of trouble to find customers who will come to their offices and apply for credits in person. In this obsolete world order, the lender would have no way of trusting a customer without having seen him/her, and the customer is obliged to sign a whole bunch of documents to apply for credit. Adding the costs incurred by credit scoring companies, customer acquisition costs require a minimum amount of credit level to be issued for the borrower so that lender may still be profitable. Colendi provides lenders with a viable risk analysis tool to verify the customer, issue fully automated credits to minimize the cost, eliminate human errors, welcome anyone as a potential customer through an instantaneous process. Lenders therefore may enjoy lower effort and costs while seeing customer base growth thanks to Colendi.

We will keep on working hard for the Colendi Project and keep you updated. Keep following us!