Sphere believes in providing additional utility for Web3 users in the form of a decentralized lending platform dedicated to providing credit. There isn’t a solution like this that exists today.
The Sphere lending platform taps into community captured value as a means to deliver credit to individual members. Similar to the community bank paradigm, Sphere is organizing Web3 communities in both developed and emerging countries and providing them the tooling needed to distribute credit to those who need it. Delegates are voted on by the community and act as the community fund managers. The lending model is peer-to-peer which allows early-stage communities gain access to external liquidity providers. Also, the community or individual members can make deposits into the community fund to be withdrawn by members. Lenders are provided an APY on deposited funds. Loan terms and conditions are set by the community to support a wide variety of for-profit and non-for-profit Web3 communities. While everyone can lend, only community members can borrow. The membership validation process and criteria is set by the community and ranges from KYC with government IDs to non-KYC validation methods tied to ownership of a NFT and/or public token. By leaving it up to the community, we can support community funds that require KYC as a means to deploy unsecured loans, but don’t leave behind the communities in emerging markets where KYC is not available. Now that you know a little more about the product, let’s discuss the platform responsibilities.
As the platform provider Sphere provides the credit underwriting with an boosted gradient tree algorithm to determine credit worthiness based on the on-chain transactions of a given wallet address. Wallets are scored based on their credit worthiness and a credit limit is provided to help give community funds the right guidance for allocating credit. Additionally, the Sphere platform handles all of the user authorization, validation, community and member onboarding, as well as the security and reliability of all smart contract transactions. But why are communities incentivized to use the Sphere lending platform.
Partners that set up funds on the Sphere lending platform are provided up to 2.5% of all transaction volume perpetually. This enables community treasuries with a reliable recurring revenue stream for core operations and community growth endeavors. We see many Web3 communities that achieve a high market capitalization, but have no way to generate recurring revenue.
In a more practical sense, Sphere unlocks a number of different use-cases for DeFi/Web3:
The NFT market has seen explosive growth over the past couple of years with popular marketplaces like OpenSea experiencing tens of billions of dollars in volume per month. NFTs provide value for both collectors, socialites, and utility-seeking individuals.
Use-Case: The Sphere lending platform allows consumers to buy NFTs with an unsecured loan.
Extremely successful NFT projects like the Bored Apes Yacht Club provide subsequent investment opportunities that are at presale costs to their members. What happens oftentimes is that original members of a project that invested early on at a nominal cost end up not being able to participate in future investment opportunities within the project. This is because they don’t have the liquidity to buy at pre-sale and can’t sell their original NFT to cover those costs due to the presale spot being dictated by continued ownership of the original NFT. Historic data tells us there is a huge opportunity cost with not being able to buy at presale value in successful NFT projects.
Use-Case: The Sphere lending platform allows early members to buy into subsequent NFT presales while maintaining ownership of their original NFT and pay the debt off over time.
Axie Infinity has become one of the most popular Web3 projects due its play-to-earn business model. Axie Infinity is a blockchain-based game that allows players to collect, train, battle, and trade creatures (called Axies). Players must first own at least three Axies before they can start playing the game. The Marketplace in Axie Infinity is where players can use the blockchain to transact in-game purchases with the average Axie price sitting around $400. Once equipped with a team of Axies, players can battle or breed their Axie collection to earn cryptocurrency.
Use-Case: The Sphere lending platform allows consumers to make in-game purchases for popular blockchain-based games with an unsecured loan.
Other use-cases that we have identified include virtual real estate, advertising campaigns, and membership costs. Additionally bridge loan use-cases include: locked liquidity, and payday loans. Lastly, our unsecured lending platform can provide consumers with crypto to buy real-world goods and services. For an exhaustive list with concrete examples please read our whitepaper on our website.
The front-end for Sphere has been completed with smart contract work underway. It is targeted to go live on Harmony in August 2022. We have 2 partnerships to date with many more in flight. Our committed partners represent over $15M in market cap with over 5K members between both communities. We are planning on raising at least $2M to achieve the entirety of our product roadmap. Our milestones and goals are listed below. The current gaps on our team relate to legal and regulatory areas.
$10K after launching a feature-complete product on our testnet
$10K after forming a DAO with 5-out-of-9 multisig with our DAOs
$10K after launching on our mainnet with audit
$10K after 1K daily active users (with launch video, full PR promotion)
$10K after 10k daily active users (with a detailed roadmap, governance process)
Within the first three months of launching we would like to hit all of the following metrics:
- 100+ communities
- $250M in total community market cap
- $5M in liquidity for unsecured loans
- $20M in transaction volume
- 10K in monthly active users
- 10K in transactions per day
- $1M in unsecured loans transacted in a single day
Website: https://spheredao.finance/ (includes social media accounts and Discord link)
Pitch Deck: SphereDAO Pitch Deck - Google Slides
Whitepaper: Latest Sphere Investor Memo - Google Docs
Demo: Exploring the Sphere Credit Platform - YouTube