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LALA LENDS - Product and Token Economics

Dear LALA Family, LALA LENDS OVERVIEW What is LALA LENDS? LALA Lends (“LLL”) is the micro-lending &am
Team LALA World
LALA LENDS - Product and Token Economics
By LALA World • Issue #97 • View online
Dear LALA Family,
LALA LENDS OVERVIEW
What is LALA LENDS? 
LALA Lends (“LLL”) is the micro-lending & micro entrepreneurship arm of LALA World’s Global Financial Ecosystem. LLL is a digital lending platform on Blockchain that enables peer-to-peer (“P2P”) and direct lending. 
With advanced digital identification such as:

Fig.1 Advanced Digital Identification
Fig.1 Advanced Digital Identification
With one of the strongest pool of partners globally, we leverage on existing infrastructure of these partners to offer local credit scoring, community reach, banking services, loan insurances, guarantor support, and much more. Our goal is to create a LALA community built on trust, compassion, and accountability while serving the needs of lenders and investors to financially reach 2 billion plus individuals who are financially excluded. In doing so, our ultimate vision is to make them self-sustainable, grow local GDP’s, provide them financial education, and eliminate their dependency on brokers and middlemen.
LID and LS work as a base with state of the art biometric and scoring algorithms using Machine learning and AI, allowing us to effectively assess borrower’s profile and give them a basic rating as soon as they log onto the platform.
You can read more about how “LID” works… Here
Everyone realizes today that Blockchain technology has the ability to eliminate centralized intermediaries with a decentralized system. It solves network security and transparency issues that exist with today’s centralized system infrastructure. However, today’s credit system has been a boon for the capitalists and banks that control it. It does not work for the unbanked due to too many controls, with little or no credit history.
The present system doesn’t empower young adult population, like Millennials and Generation Xers, who are unable to open bank accounts, or own credit cards since they do not have credit or savings. Roughly, 2 billion plus unbanked have no access to this formal credit. Even the salaried ones find it tough sometimes due to lack of collateral.
LALA LENDS PRODUCTS
LLL has two broad lending products:
  1. P2P Loans
  2. Direct Lending
Fig.2 LALA LENDS Flow Chart
Fig.2 LALA LENDS Flow Chart
1. P2P LOANS – DIRECTLY FROM THE LALA WALLET
  • a. Direct P2P Loans
  • b. One to many P2P Loans (Multiple Lenders to one loan)
  • c. Guarantor P2P Loans 
Verified users with valid LALA ID’s and LALA Scores are able to request loans (borrowers) or pledge assets (lenders) into an order matching internal exchange – LALA X. This allows users to input their target amounts, interest, tenor, LID, LS, etc. and even allows some flexibility in terms of variables. Once the order matches between the borrower and a lender, a smart contract is generated between them. If both parties sign the agreement, ‘amount’ is transferred from the lender to the borrower wallet. Borrower can transfer that into his bank account.
Matching algorithm supports single Lender to single Borrower (Direct P2P) loans, as well as multiple Lenders to a single Borrower (Multiple party P2P) loans.
LALA TOKEN USE & LALA LENDS REWARDS
LALA’s AI engine will monitor the performance on these loans, when they need to be repaid, and limits on how much can be borrowed.
Borrower rewards are of following types:
  1. L+ Loyalty points or LALA Tokens on timely completion. We have not decided how many L+ as we are still building this and should be ready for beta release in about two months. Concrete dates will be released in the next roadmap update.
  2. L+ Loyalty points or LALA Tokens if they are using other Wallet services and have enough L+ to avail discounts on new loans.
  3. Referral Rewards for introducing other borrowers or recommending or guaranteeing other’s loans that pay timely.
  4. Less-creditworthy individuals, small defaulters, millennials with no history, unbanked and other borrowers can increase their LALA Scores and enhance credit limits within LALA via additional guarantors (friends, families and others) on the loans in order for lenders to extend credit. These friends and families must be on the LALA platform, KYC’d and have their own LALA ID and LALA Score in place before they can guarantee. The Lender can see if there is a guarantor to this particular loan or request one if he wants to:
a. Guarantors are rewarded by participating in borrower’s loans via LALA Tokens and upon full repayment.
b. Investors / Lenders get paid higher interest for taking additional risk.
c. Borrower gets a chance to pay in full on time and improve their LALA Score for further loans.
d. A new Borrower is able to start his / her credit history fresh.
Investor rewards are of following types:
  1. Investor is rewarded in LALA Tokens for participating.
  2. Investor will also be covered by LALA World via insuring part of the underwriting. If default occurs, LALA will cover X% of the losses and decrease the LALA score of the defaulting party accordingly. Borrowers receive credit for each loan they successfully repay or are in good standing. A default lowers their credit rating.
  3. Investors can also choose unbanked projects of their choice and nominate projects globally where LALA community can then vote to participate. This could act as CSR activity of their choice where LALA will actively participate.
  4. LALA referrals and promotional campaigns from time to time.
Fig.3 Borrower Flow Chart
Fig.3 Borrower Flow Chart
Fig.4 Lender Flow Chart
Fig.4 Lender Flow Chart

LALA SCORE – PEER TO PEER AI DRIVEN CREDIT AND SOCIAL SCORING
LALA’s ultimate aim is to make everything peer to peer, decentralized in the true Blockchain spirit. However, we are also aware that this change will not happen overnight. We need to prepare ourselves for achieving this goal. That is why LALA is implementing a credit system that scores you based on traditional parameters initially, includes social parameters as you transact more and then continues to add peer-to-peer credit appraisals to improve your credit ratings.
Starting with each user’s creditworthiness based on their traditional public histories and digital identity scores from other partners and third-party providers, LALA will also include user uploaded data and past transaction histories. It will process that data into an on-chain hash score representing the algorithms creating comprehensive LALA Scores which then is available to the LALA member community. Different pieces of information will have different weights toward influencing an individual’s LALA Score. 
LALA members can also apply to receive credit from other trustworthy network members, depending on their transaction histories and information attached to their identity profiles. Additional certified validators from anywhere around the world can lend their credit to non-creditworthy members. Those with extra capital can earn returns by lending, and those needing capital can easily find it among community members. Lenders can join a lending pool that dynamically lends to borrowers. In this way, lending pools mitigate risk because they are diversified over several different loans, and they can receive higher returns.
The value of such a distributed LALA Score can be anticipated from the fact that so much of the world is unbanked and unable to access financial institutions. A simple credit score can allow people to access many more resources than they currently have, such as loans for large purchases, better financing and accessibility to renting property.
Because of the limited reach of financial institutions worldwide, Blockchain based platforms can become people’s trusted financial institution and provide secure financial services to those without access to traditional systems. Lenders get access to a wider pool of borrowers using a centralized score and platform, which was hitherto unavailable or difficult to access, providing them a better risk adjusted return on their capital.
LS = LALA SCORE
LALA Score = WEIGHTED AVERAGE of (EXTERNAL CREDIT SCORE - IF AVAILABLE) + PROPRIETORY INTERNAL SCORE USING CREDIT AND SOCIAL PARAMETERS DEPENDING ON LOCATION, SERVICE AND pRODUCT+ XXX Points for validation from LALA KYC partner + YYYY Points for validated LALA ID + ZZZ points for transaction and repayment history)
LALA Score varies between 1 to 10 and the score is updated after each transaction. If a repayment by a borrower fails, X points are deducted. Otherwise, Y points are added, plus Z points per dollar value of each successful transaction. 
The formula for determining the amount of credit and other LALA Score parameters would be made transparent and open source as time goes by. It will be centrally controlled by LALA in the beginning.
A new LALA member with no transaction history or any financial documents or identification will have a baseline credit rating of 1, and credit could not be extended to them. New members can develop their credit by transacting with other members in the network.
INTEREST RATES AND TRANSACTION FEES
Borrowers and Lenders can allocate their own Interest rates, amounts and tenors on the LALA Lends internal lending exchange. However, LALA platform will automatically calculate Transaction Fees based on the member’s credit rating previously determined.
Initial transaction fee will be fixed and based on local interest rates. Thereafter, it varies with transaction history and real-time LALA Score. All members will have the ability to earn back this fee in full or partially by paying back their dues on time, pre-paying all their dues, transacting more often on the wallet and various other promotional schemes from time to time. These interest rates are typically based on LS and other loan parameters. Borrowers with lower LALA will be charged a higher rate. This rate continues to change over time as the LALA AI engine learns more with higher number of transactions and more number of users with different LS ratings and different loan terms. Rates will also vary between countries as we expand globally.
Higher risk countries might carry much larger risks and hence higher interest rates. Initially P2P lending will be restricted to intra-country borrowers and investors till the time we can clear all regulatory hurdles to expand this to inter-country participation between borrowers and lenders – our ultimate goal in true Blockchain spirit.
LALA is continuously improving the scoring algorithms and AI engine on top. Every loan is rated individually for the borrower as well as for the lender. For each current loan in good standing or fully paid loan, the borrower receives X points plus Y points for each dollar in the loan. Also, some additional points get added in borrower’s LALA Score for each fully paid loan. If a loan defaults, points are deducted from the borrower’s LALA Score.
LALA Exchange also allows P2P loans with multiple parties extending credit to a single borrower, that is partial matching of loans is allowed if the user so chooses to. Once matched, LALA platform will arrange a smart contract with multiple lenders to consolidate funds for a single loan to an individual. In this way, multiple lenders can limit their individual default exposure while still being able to extend loans. A many to one type loans have considerable advantages over a one to one loan. These loans mitigate risk in case of a default, they increase participation of small lenders, add flexibility and scalability, as well as reduce abandonment risk.
HOW TO REDEEM THE L+ AND LALA
L+ and LALA are as good as cash. The idea is not to have multiple loyalty points that cannot be cashed. Rather have a system where everyone is equally incentivised. Allow us to explain how.
Every LALA user has a unique LALA ID and earns L+ at every step. These L+ can be immediately redeemed inside the LALA Wallet App itself to pay for goods and services like LALA PAY, LALA TRANSFER and LALA LENDS, and host of other services at global merchant and business locations. 
We will start announcing the details of the LALA partners where you can use L+ and LALA from next week. Few major partnerships will be announced in the month of May and that should become an ongoing affair as we expand globally.
L+ Loyalty Points can be used at several locations as detailed in the LALA ID paper essentially by:
  • Loyalty rewards from any other partner, not just LALA creating interoperability between loyalty rewards
  • Payment at local businesses through L+ programs
  • LALA ID user generated bounty viral referral programs, a viral referral for business development plan.
By growing its user base to millions of people, LALA Wallet and LALA Token aims to earn its status as one of the most versatile and usable digital assets in the market.
LALA LENDS & LALA TOKEN COMMERCIAL MODEL FOR PARTNERS GLOBALLY
Service providers (lenders, financial institutions, merchants, vendors, banks, Institutions etc.) have a lot of monotonous paper work trail and a lot of risk to cover when it comes to Lending. These partners can use a combination of LALA Wallet transactional data stored under unique LALA ID’s on Blockchain as well as use our state of the art LALA Score to underwrite loans, conduct Due Diligence, Approve KYC etc. with a single click.
Sometimes they are burdened by over regulations and sometimes they simply lack efficient tech. This leads to frustration for both users as well as services providers. LALA ID & LALA Score eliminates this concern and will be able to provide services in an easy, fast and efficient way. 
Service providers / LALA Partners across the globe pay for LALA ID & LALA Score API’s annually as well as in the form of transactional fee in LALA Tokens. These details will be realised close to the public launch. Merchants have to purchase these tokens from the market, other partners and specified locations, which should further increase the demand of tokens.
LALA TOKEN BACKED LENDING (“LCBL”)
Within our partner Crypto Wallet (to be announced in next 2 weeks), L+ can be converted into LALA and used for Borrowing / Lending – LCBL that allows users to leverage their crypto assets to secure cash loans in their nominated currencies. Liquidity of crypto assets is a huge problem today and LALA Lends aims to solve that while maintaining your positions. LALA is creating white labelled solutions of LCBL for partners’ crypto wallet, financial exchanges and for other financial institutions.
LCBL allows individuals, institutions to directly underwrite these crypto based loans, while giving investors the ability to safely lend against several crypto assets. Crypto assets underlying each loan are stored in a fully audited, ultra-secure multi-signature architecture throughout the life of the loan. However, we will only provide these services in Wallets and countries that abide by current regulations in those countries.
All contracts between borrowers and lenders are real-time Smart Contracts that utilize prices from multiple global data providers like ShapeShift and CryptoCompare while simultaneously tracking the borrower’s loan balance. All loans receive automated margined calls if the loan value falls below a certain threshold. If margins are not met, automatic liquidation of the collateral occurs and distributes the proceeds to various parties as per the conditions written in the Smart Contract.
Institute/organizations need to pay for this white labeled solution in LALA Tokens. LALA Token will be the default collateral token on this platform.
The Network Effect – LCBL marketplace offers borrowers access to affordable credit and allows individual & institutional lenders the opportunity to lend against a new class of assets. As both sides of the equation grow, the advantages (reduced risk, lower cost) scale accordingly, attracting even more borrowers and lenders. The increased participant pool generates competitive interest rate dynamics and data, which is used to improve the effectiveness of LCBL’s risk models.
Financial Inclusion – A certain percentage of total sales fee is set aside for LALA’s ultimate goal of making “Human Lives Better.” This fee will be used to develop community projects and used to distribute LALA Tokens back to grassroots level. This allows us to provide lines of credit for LALA ID users who have no formal background or credit, the migrants, the unbanked, even the poor students who are unable to get credit as a result of social exclusion. 

2. DIRECT LENDING
  • a.  Micro Lending
  • b.  Micro SME Lending
Based in various geographies, LALA will act as a Micro Finance Institution with branches in Malaysia, India, Dubai, Bangladesh to begin with. We are also expanding quickly into other countries and will keep you posted in our monthly roadmap updates going forward.
In each market, we will partner with existing micro finance companies and existing money lenders. While we see local microlenders trying to bring about financial inclusion, they do not have access to technology and global capital, making them non-scalable, inefficient and hence expensive for the borrowers.
LALA Lends can offer to these partners a complete solution:
  1. State of the art Blockchain based lending platform – this includes LAlA ID and LAlA Score.
  2. Capital: LALA Lends will provide capital to existing lenders and connect local and global institutional lenders.
MICRO LENDING AND SME LENDING
a. Micro Finance - Setting up/partnering with rural as well as millennial focused Micro Finance Institutions for providing micro loans to individuals, micro entrepreneurs and small businesses. Also collect term deposit and savings on behalf of banks that we are partnered with, as and when allowed by local regulators
  • i. Micro-loans- $1000 to $10,000 with top up facility
  • ii. 1 month to 3 years tenor with fortnightly repayments
  • iii. Individual borrowers or group borrowing as Joint Liability Groups
  • iv. Savings/Term Deposits through banking partners arrangement
  • v. Lend via partners as well as own balance sheet
b. Micro Insurance – Tie-up with insurance company for micro insurance which includes life as well as general insurance
  • i. Life and accidental insurance bundled with micro loans
  • ii. Medical insurance with monthly premiums as an incentive
c. Social Impact - Using our own distribution network as well as partners reach for facilitating assistance in education, health care support & other income generating activities at community levels.
  • i. Running e-learning LALA centres at branch premises and other LALA Shops
  • ii. Running virtual medical clinic at these centres
  • iii. Assistance in other income generation activities to make them self-sustainable
  • iv. Adopting villages, bling schools, orphanages, solar and wind electricity plants closer to branches to help them become self-sustainable

LALA LENDS TOKENOMICS
LALA Token is a key element of LALA Lends platform. Always remember, L+ = LALA in 1:1
  1. For sharing his LALA Score with 3rd parties, User has to pay certain L+ or LALA (say 1 LALA for discussion sake) to platform as a facilitation fee. And if 3rd parties (Bank, NBFC etc.) want to see the users LALA Scores, they need to pay LALA Score API annual fee as well as an incentive fee to user and facilitation fee to LALA World on each transaction, all in LALA Tokens. 3rd parties will purchase these tokens from the market, which will further increase the demand for tokens.
  2. LALA Partners, 3rd parties will need to pay in LALA Tokens for purchasing LALA backed lending white label solution and LALA Tokens will be the default collateral token for that platform.
  3. Borrower is rewarded in LALA Tokens on full timely EMI payment and other rewards as detailed above.
  4. Investor is rewarded in LALA Tokens for participating and other rewards as detailed above.
  5. Guarantors are rewarded by participating in borrower’s loans via LALA Tokens and upon full repayment.
Fig.5 Commercial Model
Fig.5 Commercial Model

MEMBERSHIP PRIVILEGES IN THE FUTURE

Membership in the LALA network carries certain privileges. Primarily, a democratized voting system will be eventually implemented. LALA will also implement a referral rewards system. Bringing new members into the network will reward the referring party with increased LALA distributions and decreased transaction fees for a period of time. The rewards can be increased and extended depending on the conduct of the member the referring party brings into the network.

For example, recruiting an active lending member with high transaction frequency will result in heavily reduced transaction fees, versus bringing in a member who does not transact in the LALA network, which will not lead to much fee reduction. Large LALA and other L+ holders will be granted discounts on products and services within the LALA Ecosystem, with largest holders receiving the biggest rewards relative to smallest holders.

LALA plans to support the top 20 leading Blockchains and enable members to benefit by offering similar services on other platforms.

Blockchain comes as a blessing in disguise for LALA Lends. Global lending market needs fixing. There is a clear inequality between various countries in terms of access to credit and also varied interest rates. This must be eradicated in a true global economy. 

                                                        ….
We are working relentlessly to build the single-most powerful and trustworthy global ecosystem. We believe that we are on track, as each day at LALA we make new strides in our vision and come closer to becoming a global phenomenon.
Truly humbled and grateful for the continued support from our LALA family, without whom this wouldn’t have been possible.
Thank you for being part of this incredible journey!
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