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:
- State of the art Blockchain based lending platform – this includes LAlA ID and LAlA Score.
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
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. Life and accidental insurance bundled with micro loans
ii. Medical insurance with monthly premiums as an incentive
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
- 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.
- 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.
- Borrower is rewarded in LALA Tokens on full timely EMI payment and other rewards as detailed above.
- Investor is rewarded in LALA Tokens for participating and other rewards as detailed above.
Guarantors are rewarded by participating in borrower’s loans via LALA Tokens and upon full repayment.