Micro-lending and Borrowing: A Little-Known Revuto Use Case

4 min readNov 11, 2021

Summary:

According to a recent report, the amount of debt outstanding exceeds $30 billion
With our blockchain-based micro-lending solution, Revuto aims to serve the Cardano community in a meaningful way, helping individuals, startups, entrepreneurs and indeed anyone acquire the micro-credit they badly need
Take a look at our short video showing REVU micro-borrowing in action
Read more about how micro-lending and borrowing will work on Revuto

Lending is a major part of today’s DeFi movement, with numerous noncustodial protocols providing capital to individuals and businesses. According to a recent report, the amount of debt outstanding exceeds $30 billion, with key players such as Maker, Aave, Celsius and Compound responsible for the lion’s share of loans issued.

Of course, this figure is a drop in the ocean compared to the traditional lending market — which is worth a staggering $7 trillion. Nevertheless, great strides have been made to improve access to loans for those who have been under-served by tradfi.

The first wave of crypto protocols matching borrowers and lenders via smart contracts has been a revelation, introducing a model that works for everyone: the liquidity providers pledging LP tokens for loans; the platforms who earn revenue from fees; and the borrowers who get to acquire much-needed finance on favorable terms.

Decentralized Lending is Coming to Revuto

Many Revutonians late to the party might not realize that we are building more than just a crypto-powered subscription payment platform. That’s right: in addition to helping you leverage Cardano-native tokens and DeFi to pay for your subscriptions, we’ll also be offering decentralized borrowing and lending.

The permissionless micro-lending service we are developing involves the issuance of small loans to borrowers who may lack the credit history required to obtain finance from their bank. With our blockchain-based micro-lending solution, Revuto aims to serve the Cardano community in a meaningful way, helping individuals, startups, entrepreneurs and indeed anyone acquire the micro-credit they badly need.

How Does Micro-lending and Borrowing on Revuto Work?

Essentially, by giving holders of our native REVU token access to loans denominated in Cardano-native EURR stablecoins. All you need to do to obtain working capital is to stake REVU, with these tokens serving as collateral for the microloan. At the same time, of course, you’ll also earn yield on your REVU.

Initially, our loan-to-value (LTV) ratio will be fixed at 2:1, meaning for every $100 worth of REVU tokens staked, you will be able to borrow 50 EURR tokens ($50). EURR, for the uninitiated, are pegged 1:1 in value to the Euro — meaning holders can escape the volatility that crypto is sometimes KNOWN FOR. Borrowers are able to repay their microloan at a later date with 20% interest, with REVU stakers entitled to take out unlimited loans as and when needed, provided the 2:1 LTV is maintained.

By integrating micro-lending into Revuto, we can address a long-standing problem for the subscription economy. Namely, the situation whereby an account goes into the red after an automatic payment is taken. Failed payments are truly headache-inducing, with cascading effects including bank charges and deactivated subscriptions. Now, when the payment due date is imminent and your account is low, you can quickly acquire an EURR loan to cover the cost. Alternatively, you can hit Snooze before reactivating your subscription the following month.

Here’s a short video showing REVU micro-borrowing in action. In this example, though, the user isn’t resorting to borrowing EURR stablecoins; merely borrowing REVU from the community (liquidity pool) to cover a subscription when their balance is zero. It really is as easy as that!

We can’t wait for you to see what else we’ve got cooking under the hood. Stay tuned!