Collateral-free trustworthiness-based personal lending on a decentralized application (DApp)

Abstract

Most loans given by banks are secured loans and require the borrower to provide collateral as a guarantee for returning the loan principal and interest. With a secured loan, the lender can take over an asset provided as collateral if the customer cannot make the loan payments. In this paper, we propose a peer-to-peer personal lending platform that minimizes the requirement of collateral. The trustworthiness of borrowers is considered as an indicator of whether the borrowers will pay the installments on time. Borrowers’ reliability is viewed as a function of their reputation and relationships. The lending platform is designed as a Blockchain Decentralized Application (DApp).