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Credit is simply giving someone a dollar and expecting them to return it - be it a lifeline, an open line of credit, or an investment bridge. Union functions as a primitive so that anyone can lend, borrow, or build credit on-chain.
Union is more a primitive than a product.
There are many types of credit relationships that could be defined in Union:
- 1 → 1: This is a lot of overhead for the use case of a single person lending a friend $20. (Passive Nature: When you borrow from a friend)
- Many → 1: Groups working together: 3 people vouching $100 for a 4th, gives the 4th access to $300.
- 1 → Many: a single Underwriter vouching for a param, a DAO providing it’s members a credit line
- Many -> Many: All of the above contributing
- 1.Creates efficiency. 1 Dai can be vouching for multiple accounts and contracts until it's actively borrowed.
- 2.Brings real world trust on-chain while retaining pseudonymity.
- 3.A whole market of new businesses in between 0%-150% LTV products.
- 4.Smart Contracts/DAOs get with credit lines.
- 5.Invest by extending credit.
- 6.There’s additional UX mechanisms and experiences you can create to incentivize vouching for different behaviors ie vouch for charity (microfinance), invest in a dao by vouching (instead of a convertible note), etc