While
thinking about a credit market in Steem, I once again remembered an idea I had before, but now I have a more clear concept how it would work.
Fully collateralised loans are the best for everyone if they are possible. The borrower has an illiquid asset that can be automatically apportioned and transferred to another user.
The loan is already settled as it is disbursed.
So, basically, this is how it works:
One person puts up an offer to lend out steem to another user at an interest rate, which locks the Steem from transfer and awaits a bidder.
The borrower accepts the offer and the lender checks the total is already available from the user's Steem Power, and the borrower is eligible.
The Steem Power of the amount plus interest is then paid out as Steem Power to the lender, in 13 equal weekly payments. The Steem power cannot be powered down by the borrower, but it remains counted, what remains, as the Steem Power of the user, and then with each payment the Steem Power becomes the Lender's. Or it could be held out of circulation and not account to anyone's Steem Power until the Lender receives it (a cost for the borrower in Steem Power)
There is a zero default rate on fully collateralised loans. Exchanges use them with margin trading, they close the position when it hits the margin requirement, i.e. full repayment.
This facility would greatly increase the utility of Steem, as well as attract users for this function. I personally could use it right now, buy a new phone for my work, instead 2 maybe 3 weeks I have to wait. This work tool, with its small memory, storage and cracked screen is impeding my work.
I am quite sure that this would bring money for people looking for an investment. People with sufficient Steem Power to fund something can get it started quicker, with a guaranteed return for the lender. It shouldn't be difficult to add it either.