The goal of this DAO is to get money into the pockets of Ukrainian farmers who need the help. Our thesis is that this is more long-term viable if we structure it as an investment opportunity as opposed to a charity. In other words, we want to allow people to invest in fellow humans similar to how we invest in companies today, but in a decentralized way that optimizes for speed.

The challenge is structuring this so that investors are paid back and the project isn’t taken advantage of by people who just want to take the money and run. If the structure of the organization is decentralized/nonhierarchical, and if the investments/loans are not collateralized, what incentives can we put in place to ensure that investors are made whole?

This paper attempts to answer this question.

Investors:

Investors will contribute funds in the form of stablecoins into the “LP treasury” and receive an equivalent number of LP tokens in return. For example, 1 dai deposited in the LP treasury results in 1 LP token deposited into the contributor’s wallet. At any time, an investor may exchange their LP tokens back for stablecoins, effectively exiting their position. Notably, this can only happen if there are enough stablecoins currently in the treasury to cover the exit request. If there are not enough (because they are being loaned to Ukrainian farmers), investor exit requests will enter a queue and be settled in order of when the requests were made.

Farmers will pay a flat yearly interest rate of 7% on the loans they receive from the DAO. To break this 7% down; 4% will go into the LP Treasury, 2% will go to “U token” holders, and 1% will go to the DAO treasury. Of the 4% that goes to the LP Treasury, 75% of that will trigger new LP tokens to be issued to investors. The remaining 25% will just build up the LP treasury over time so that exiting an LP position doesn’t require waiting as long in the queue (this cushion also provides extra insurance against delinquent loans).

As an example, let’s assume an investor deposits 100 dai into the LP treasury. She receives 100 LP tokens in return as “I-owe-you’s.” She can turn around and immediately exchange the LP tokens for her 100 dai, but if there is a queue she will be put at the back of the line and have to wait until there is enough money in the LP treasury (which will come from both new investors and payments from farmers) to cover all of the exit requests that came before hers. (Farmers waiting on loans will have their own queue that is active only when there is no investor exit queue. In other words, investors get first dibs when requesting their money back.)

When our investor enters the queue to exit her position, her daily LP rewards will still accrue but at 1/2 the rate. This is to discourage a scenario in which investors always immediately enter the withdrawal queue after depositing, only to reinvest when they receive their money (in order to have constant quick access to their funds), which is a scenario that would lead to farmers rarely getting loans (as their requests only trigger when there are no investors in the withdrawal queue). The goal is to have investors put money into the pot and leave it there until they actually want to exit the project.

To continue…if she doesn’t immediately withdraw her funds, she will automatically begin earning interest payments in the form of LP tokens. If there are 10,000 LP tokens in total at a given time, issued to all investors, her share of 100 LP tokens will equal 1% of the pool. If the farmers make $300 worth of payments the next day, and $5 of these happen to be interest payments (meaning $295 is paying down initial principal), the investor will receive a pro rata share of 3/7 of those interest payments. Since interest payments were $5, $5 * 3. / 7 = 2.143 LP tokens will be issued to investors. Since our investor holds 1% of outstanding LP tokens, she receives 0.02143 LP tokens (with a corresponding value of $0.02143).

To complete the picture, even though these won’t be discussed until later in the paper, here is the breakdown of what happens to the full $300 in farmer payments for the day:

$295 in original principal payments goes into the LP treasury

4/7 of the interest payments ($2.857) also goes into the LP Treasury

1/7 of the interest payments ($0.714) goes into the DAO Treasury

2/7 of the interest payments ($1.429) goes to clusters holding a “U” token (something a cluster gets when every farmer in his cluster has been paid off). This will accrue in a 12/22 multisig belonging to all 22 members of the cluster. In other words, the cluster of farmers, being members of the same community, will get together and vote on how to use this money to benefit themselves or the community.

And as mentioned before, LP tokens are generated for 3/7 of the interest payments (2.143 LP tokens worth $2.143), which are distributed automatically to current LP token holders based on the number of LP tokens they currently hold in their wallets compared to the total LP tokens outstanding.

As an incentive to kickstart the project, investors who contribute at least $100 to the protocol will receive an NFT. We could do tiers where $1,000 gets a different type and $10,000 is the most elite. Since the project is supporting a good cause, these could be coveted and really get things rolling.

The loan side of things:

Since there is no centralized entity, there is no viable way to store kyc information long term (though we may rely on limited kyc info that we already have access to in order to onboard the first farmers, as discussed later). As a decentralized DAO with fluid membership, there is no clean way to hire an HR department charged with securing this information. Further, it is our hope that our model can be used in the future to help other groups of people in other countries, as needs arise. Creating a system that does not rely on kyc requirements will allow us to respond much more quickly to crises.

Without kyc, it follows that we will have no way to secure collateral for these loans with any real-world assets. In defi, loans are collateralized by cryptocurrency, but the point of this project is to help farmers who may not have money to buy crypto. (If they owned crypto, they could just use a defi lending platform like Aave and wouldn’t need a project like ours.)

Further, in traditional finance, loans are backed by a legal system that helps ensure they are repaid. Without kyc or any of the long, complicated contracts we hope to avoid in the interest of speed and corruption resistance, we will not have access to this legal safety net either.

So we must have another way to identify loan recipients and make sure they are incentivized to uphold the terms of the loan.

We propose two mechanisms to achieve this, which combine monetary incentive and, to put it bluntly, peer pressure from neighbors.

Mechanism #1:

In order to secure a loan in the very beginning, farmers will need to create a profile on the platform, which will operate much like a social media platform. The profile will be connected to a decentralized ID from something like Proof of Humanity or BrightID, which will help ensure that people aren’t applying for multiple loans.

Each farmer will be required to create a video of themselves explaining what they intend to buy with the loan and where it will go. Loans will only be issued for purposes that can be reasonably verified. For example, it is easy to see a video of a location without a structure, and then a video two months later of the same place with one (more on this later).

The video will also tie them to a particular “Community,” or a preset geographic region roughly 500 km2 (the size of a town and surrounding area). We can use geolocation services for this, but we need a way to obfuscate it so that the platform reveals what Community someone lives in without revealing their exact location (for privacy purposes). We will also need to make sure that people live sufficiently far from each other (>1km) so that multiple members of the same family don’t belong to the same cluster.

Finally, they will need to connect with a cluster of 20 other farmers from the same community. This cluster will act as a unit in multiple ways and members will be incentivized to encourage and help each other pay back their loans.

Any farmer can start a cluster. In order for another farmer to join the cluster, they must request entrance and one farmer in the cluster must approve the request. Then there will be a 7-day period in which any other cluster member can deny entry to the new member. Once the seven days passes and the new farmer joins, they can opt to exit the cluster at any time as long as they haven’t already received funding. Alternatively, a cluster can kick someone out by majority vote as long as that person has not yet received funding.

Once a full cluster is formed with 21 farmers, the cluster’s status will change from “forming” to “pending” and is now considered a Level 1 cluster. Only one Level 1 cluster may be active in any Community at any given time. When there is enough money in the LP Treasury to justify activating a new cluster ({# of unfunded loans in active clusters} / 4), the DAO can select a new cluster to become “active,” meaning their farmers can start requesting loans. This will be done by vote of everyone in the DAO. Votes will be weighted based on reputation (more on reputation later) and will last for 3 days. No quorum is needed, and the cluster with the most votes by the end of the week wins. Winners will probably be the clusters who market themselves the best with videos and photos, provide the most evidence that they are all in the same community (group photo maybe?) and not members of the same family, and convince investors that they are trustworthy and will pay down their loans.

Spinning up a profile will be permissionless, but we do have a small ace in the hole to kick start the process. Backcountrydrifer (BCD) already has kyc information (including credit history) on many Ukrainian farmers. BCD will contact those farmers with high credit scores and encourage them to set up profiles in the beginning. This will start us down a less risky pathway initially. BCD will not share this information with anyone else in the dao.

To continue, the order in which farmers get loans will be selected at random by the system. Each loan will be for $5,000. Only one farmer will get a loan at first. In order for a second farmer to get a loan, three things must take place:

The first farmer (we’ll call her “Farmer 0”) must pay off 25% of her principal (creating a “healthy cluster”)

Farmer 0 must submit a video showing the structure she intended to build with the money, based on her first video (this is to ensure the loans are going towards what they were intended for as opposed to being used for a ponzi-type scenario to steal funds from the LP treasury).

Someone with reputation in the DAO must propose a motion to release the funds to the next farmer, and this motion must not be opposed. Then the farmer must finalize the acceptance of the money. This step will be game-ified and explained in more detail later.

If the above 3 conditions are met, two more farmers will receive their loans. These two farmers will be in the “Farmer 1” tier.

The next tier (the Farmer 2 tier) will contain 4 farmers (see diagram below), and will receive loans in the same way as the Farmer 2 tier did, except that both Farmers 1 must have paid off 25% of their loans and Farmer 0 must have paid off 50% of her loan (if these percentages are met, we would say the cluster is “healthy.) This trend continues, with every farmer on a tier receiving a loan as long as the cluster is “healthy.” A healthy cluster is relative to the farmer wanting to open the loan, and is defined as follows:

4 or more levels above: 100% principal paid off

3 levels above: 75% principal paid off

2 levels above: 50% principal paid off

1 level above: 25% principal paid off.

(See diagram below for a visualization of this.)

By the time it’s all said and done, 21 farmers will have received loans. Just to reiterate, the health of the whole cluster is required for any new loans to be given out, so that if even one farmer hasn’t met his required %, no new farmer in the cluster can receive a loan. In this way, if there is one farmer holding up a community from receiving more loans, there will be an incentive for the community to come together and help that farmer pay down their debt. No new clusters in a geographic Community can receive any funding until the active cluster has paid off its principal.

A “cluster” is defined as the group of loanees starting with Farmer 0 and going all the way through Farmer8 (the entire diagram shown above).

What if someone in the cluster no longer wants a loan by the time their turn rolls around? What if someone dies in this interim? This is why the farmer must sign a transaction finalizing their acceptance of the money. If the money has been released, the farmer will have one month to accept it. If they don’t, the money goes back into the LP Treasury and the farmer moves to the end of the queue among the farmers in the cluster. Once it becomes their turn again, the process will repeat, and if they also miss that window, they will be kicked out of the cluster.

To elaborate a point, clusters existing in geographic Communities serves several purposes. First, it incentivises farmers to pay off their loans in order to help improve the welfare of their neighbors. If several neighbors are in need of capital but they can only get it if you keep your loan healthy, you’re likely to feel social pressure to do so. This only works if you know your neighbors, and if you are the only thing standing in their way of gaining access to this capital. If a farmer from another cluster (another community) is able to approve your neighbor for a loan, this takes the pressure off of you to pay your debt.

Also, this helps ensure that the farmers know each other well enough to make judgment calls on who they believe are credit-worthy when forming their cluster in the beginning.

Mechanism #2:

Any cluster which repays all its loans in full will receive a “U” token. This token will entitle a treasury, controlled by the cluster, to receive a portion of the overall interest repayments from the protocol. As noted above, 2/7 of all interest payments will be paid to “U” token holders in the form of stablecoins. As mentioned above, this treasury will take the form of a 11/21 multisig consisting of every farmer in the cluster.

Added incentive: if a cluster pays off all its loans within 3 years of Farmer 0 taking out the first loan, the cluster will receive an extra .5 U tokens (a 1.5x booster). These U tokens will reside in the cluster’s treasury and may be sold just like any other token, along with all future rewards.

NOTE: anyone can pay down anyone else’s loan. If a cluster is losing out on their U token due to one farmer who isn’t paying off his loan, neighbors can help that farmer out for the benefit of the group if they so choose. Other deals could obviously be negotiated outside of the DAO as well, etc.

In the Weeds:

As mentioned before, loans are intended to fund certain predetermined projects specified in video format by the farmer requesting the funds. The projects must be reasonably provable (like building an immovable structure). This is to discourage a farmer taking the funds to buy a tractor, then taking a video of a neighbor’s tractor as their proof, and using the loan funds to keep the cluster healthy until the point at which a colluding cluster could steal the maximum amount from the DAO (which happens to be $37,500). At the end of the day, it will be up to the DAO members to decide if everything is above board.

Once the funds are released, the farmer will use the funds as intended and post a second video showing evidence of the completed project. This could be a video of the new structure, or even a picture of a receipt for seeds and a video showing the seeds being cast in the field.

Once this has been done, if the cluster is healthy, the next farmer will be up for their loan. Someone with “reputation” in the DAO (explained later) must make an on-chain proposal to release the funds to the next farmer. The proposal will sit for a week, during which time anyone in the DAO can oppose it. If no one opposes it, the motion passes by “lazy consensus” and the next farmer receives their loan.

Note: the person who proposes the release of funds will receive $40 of the loan (and another $40 of the loan will go to the Public Goods Fund, discussed later) so the farmer will actually get $4920 instead of the full $5000. This is how we game-ify efficiency in payments to farmers. Anyone with reputation in the DAO will be able to earn $40 if they are the first to propose a valid release of payment to a farmer. They must do their due diligence, however. We will be using Colony for this, so in order to make a release-of-funds proposal, the proposer must stake $40 of their own money. If they are hasty and the previous farmer clearly hasn’t provided enough evidence that they’ve used the loan for its intended purpose, someone else with reputation will have grounds to oppose releasing the funds (and 7 days to do it). To do so, they must stake $40 of their own money. Then it will go to a vote, open to anyone with reputation in the DAO. After the voting period, whoever loses the vote will lose their staked $40. The winner gets their stake back as well as a portion of the loser’s stake, which they will also share with those who voted. Note that voting ONLY HAPPENS when there is a disagreement over whether the funds should be released. If we rarely have actual votes, it reduces the risk of voter fatigue among DAO members.

The loans themselves:

The loans will accrue interest continually. It is completely up to the farmer when he wants to make payments on the loan. If he decides to never pay, the interest will simply continue to grow. However, this will effectively put an end to DAO investment in this community until the loan is paid down to beneath the levels shown in the diagram above. That extra 1% worth of interest that flows into the LP Treasury without triggering the issuance of LP tokens (explained above) will hopefully offset the delinquent debts that will inevitably happen. If a neighborhood (cluster) wants to re-enter the program, neighbors will have to figure out a way to make the cluster healthy again.

The Skeleton Crew and reputation:

There will need to be a skeleton crew to set the DAO in motion. These will be the members with the most “reputation.” Reputation, in Colony, is accrued as a DAO’s native tokens are doled out to members. For example, if the DAO pays someone 1 native token, that person also gets 1 reputation point. Our native tokens will not hold value and cannot be traded. They will simply be locked in recipients’ wallets, and their only purpose will be to allocate reputation.

Reputation is needed to make proposals, and the amount of reputation someone has directly influences the amount of weight their vote holds when a vote occurs. Reputation degrades over time, with a half-life of 90 days, so that as the active members of the DAO change, the allocation of reputation can move to reflect the current state of things.

Tokens (and thus reputation) will be doled out once per month. 10,000 tokens per month will be issued: 5,000 to investors; 4,500 to the Skeleton Crew; and 500 to U Token holders.

Investor’s tokens will be doled out automatically based on the amount each investor has supplied to the LP Treasury as a % of the total number of LP tokens in existence. Since the investors supply the funds, it makes sense that they have a say over whether or not these funds are released to the specific farmers they are investing in.

The 500 native tokens issued to U Token holders is to give them the reputation they need to propose the release of funds (explained before), which allows them to take part in another potential revenue stream and also to get more involved in the DAO. They will simply be divided evenly among all farmers who belong to a cluster that is totally paid off.

The 4,500 split among the Skeleton Crew are to ensure that a group of people can always exist to keep the gears of the DAO turning and the values intact. These folks will originally be the group who brings the DAO into existence, so they will naturally be aligned with the values of the project from the beginning. Over time, as new people emerge who want to participate, this monthly token allocation will allow the decision-making power to shift like a slow-moving amoeba blob to the people who are currently adding the most value. Hopefully, many of these new members will be Ukrainian farmers who have benefited from and believe in the project.

These 4,500 tokens will be split up along all of the Skeleton Crew using Coordinape. Basically, everyone in the group will receive 100 votes each month. By the end of the month, everyone is encouraged to have given out each vote to other members based on the value they believe these other members brought to the group. (No one can vote for themselves.) 4,500 tokens will be distributed based on the percentage of total votes each person received. In order to bring a new person into the Coordinape voting round (and therefore into the Skeleton Crew), 3 current Skeleton Crew members must vouch for them. In practice, if someone is spending a lot of time adding value to the group (going around meeting farmers to educate them on the program, spending time in discord answering questions, etc), then Skeleton Crew members will probably take notice. If three of them decide this person should be eligible to receive voting power, they will nominate him and then the rest of the Skeleton Crew will have the ability to give him Coordinape votes (and therefore reputation).

The idea is that influence moves slowly and intentionally from the people who have it to new people who have been vetted by the group and proven themselves aligned with the values of the project. Also, it’s an ongoing process, so as long as half of the skeleton crew is honest and values-aligned, decision-making power will be taken away from toxic members as their true character is discovered by the rest of the group. Confrontations don’t even need to happen — it can all happen in a very fluid way.

The “DAO treasury” exists partly to compensate these Skeleton Crew members, especially important if working for the DAO becomes a full time job for someone. This treasury will also be for potential lawyer fees or anything else that comes up, and allocation of these funds in whatever direction will be entirely up to DAO members with reputation. The duties of this group will arise as they arise. Maybe it’s going out into the field to investigate some potential fraud (as in one cluster decides to stop making payments and tries to secure new loans from a cluster outside of their community by defeating the location mechanism). Maybe it’s spending time answering questions on Discord. Keeping up the website, fixing bugs in smart contracts…all this stuff will be under the purview of the Skeleton Crew.

Social Media-style UI

The app will have somewhat of a social media vibe. After all, we are asking people who could invest in over-collateralized defi to instead invest in totally uncollateralized quasi-anonymous individuals in a war-torn country. We are asking people to take on more risk, and part of their reward is the knowledge that they are A) helping to stabilize the world (not easy to observe in real time) and B) helping real people who desperately need that help (very easy to observe via social media posts).

Farmers will be encouraged to write about themselves, post photos and videos, the usual social media stuff. The better they market themselves, the more they stand to benefit from the project.

People’s profiles will include certain symbols and numbers that represent their progress as a loanee, and thus serve as makeshift credit scores.

. -A percentage which represents how much of their current loan is paid off

. -A $ amount showing how much interest has accrued

. -A percentage that shows how much of their cluster’s overall original principal is paid off

. -A $ amount showing how much interest their overall cluster has accrued

. -A happy symbol if the cluster is “healthy”

. -A number 1–21 showing how many farmers are in the cluster currently

. -A number showing the level of the cluster level (a factor of how many times the cluster

has paid off all of its debts)

-A number showing how many loans they have personally paid off (a personal profile

rank, as opposed to the cluster rank)

. -A “U Token” symbol if this cluster has earned a U Token (and an extra fancy symbol for

clusters who receive a .5 U Token boost)

.

.

Level 2 Clusters

When a full cluster pays off all of its debt, the cluster graduates to Level 2. This opens them up to more funding at better terms. Here’s how it would work:

Any farmer in the cluster who wants another loan can apply through their profile by clicking a button, stating how much they want, explaining what the loan will be for, and getting at least 5 other farmers from the cluster to vouch for them (this is a mechanism to weed out the riskier cluster members). Large loans here could be very dangerous for investors to agree to, because the larger the loan, the greater the incentive the farmer has not to pay it off. Any loan over a certain amount ($10,000?) will have a warning sign at the top of the page explaining that large loans equal higher risk.

This farmer is requesting a loan not from the LP Treasury like Level 1’s do, but rather directly from investors, so the more appealing his request is, the more likely someone will want to invest. The fact that the farmer has already paid off one loan should give investors more confidence and earn the farmer an opportunity at better terms. However, the fact that the risk of default is not spread across the whole LP Treasury makes the loan more risky. Therefore, these loans will both be more lucrative for investors and less expensive for farmers. The loan will carry an interest rate of 5% (or 6%) instead of 7%, broken down as follows:

. 4% to investors

. 1% to the DAO Treasury

1% to the Public Goods Fund (this is toggled to 0% if the farmer posts at least 1 video

per month updating the investors on their progress)

To illustrate, let’s assume that a farmer has asks for a $6,000 loan. A potential investor filters the app for Level 2 investment opportunities and finds this farmer’s profile. The farmer has put up a video showing his farm and all of the impressive work he has done so far. There is demand for the farmer’s produce, but in order to scale to the next level he’ll need this $6,000 loan. The investor is convinced and puts $1,000 in stablecoins down on his loan. This $1,000 sits there as if in escrow (maybe we can improve on this so it’s generating a yield, but for now let’s assume it just sits there.) The investor may pull it out at any time up until the point that other investors fill the loan request all the way to $6,000. When the $6,000 mark is hit, the money goes to the farmer and the interest charges begin.

Since the Level 2 model involves a much more direct funding relationship between investor and farmer, we can lean into this dynamic to potentially secure more funding for farmers. If an investor feels a human connection to a farmer through their profile, the investor is more likely to invest. Farmers in Level 2 clusters will have a high incentive to post videos and market themselves up until the point in time that they get a loan, but an investor will be very interested in how their investment ends up helping the farmer after the loan goes out. Therefore, the protocol will offer a 1% discount on the loan interest rate each month that the farmer posts at least one 2-minute video showing how they are, their progress, etc. These videos can receive likes from the community and farmers can make themselves more visible this way (a “trending” farmer could potentially attract more money). The farmers can also accept small payments from viewers that go toward paying off their principal. A highly charismatic farmer could get her whole loan paid off in this way just by making good videos and being popular.

(A quick note: While charismatic farmers stand to reap more benefits from this model, we are not blind to the fact that charisma neither increases the likelihood of loan repayment nor is a fair metric to choose farmers who need help. We have tried to create a system that works for everyone, but have chosen to lean into the tools at our disposal to attract attention and money from investors. Since investing in this project will likely be less lucrative than other defi investments on a risk-adjusted basis, creating online relationships and stories is one way to raise more money to help more people.)

Similar to a new cluster, once this farmer pays off 25% of his loan, another 2 farmers may request a Level 2 loan in the same way as the first one did. Actually, all of the farmers can request one, but only the next two that attract full funding will actually get a loan. Then, once these first 3 farmers have healthy loans, 4 more may be approved, as so on until either the whole cluster fills again or all of the open loans are paid off and the process starts over.

Another difference here is that in Level 2 clusters, farmers may join together to kick out a member. If >50% of the farmers in a cluster vote to kick someone out, they will be removed from the cluster and the whole platform itself. This mechanism allows clusters to self-police and weed out any high risk loanees. As an example, let’s say one farmer in the Level 1 cluster ended up being a deadbeat loanee. They took the loan and made no attempt to pay any of it back. The rest of the farmers really wanted the benefits that come from the cluster paying off its entire debt (a U token, access to Level 2 loans, and other perks on the social media portion of the app), so they pooled money to pay off that farmer’s loan for him. They don’t want to have to do this again, and the DAO doesn’t want that kind of person taking out any more loans, so the farmers have the ability to give him the boot.

An active Level 2 cluster will have as many as the original 22 farmers or as few 1 farmer with open loans. It all depends on how many of the farmers are in need of a loan at a given time. Once every farmer with an outstanding Level 2 debt has paid it down, we are back to square one. If any farmer wants a loan, they just make a request through their profile and if it’s funded, they become the new Farmer 0. And on it goes.

Note: if a farmer pays off his Level 2 loan and the cluster is healthy, he can jump back in for another loan right away. The more loans someone takes on and pays off, the higher their personal profile ranking goes and the more attractive they will be for investors to invest in. It is our hope that these people who prove a high level of responsibility may also be attractive to potential partners who can reach out on our platform and secure business deals totally unrelated to our project. Also, this ranking can be part of a decentralized credit score that other projects can use when offering uncollateralized loans to people. A pseudonymous, blank slate credit score for the world.

These farmers will have the ability to market themselves in any way on the DAO’s platform, whether that’s marketing their goods locally or globally, reaching out for a more traditional partnership unrelated to the DAO, or anything else they can think of. When a farmer brings in more income, it improves their ability to pay back investors. When anyone succeeds, everyone benefits. The social media aspect will benefit Level 2 clusters more than Level 1s, so Level 2 farmers will probably put it to more use. This in itself offers an incentive for a farmer to make it to Level 2 by paying off their original loans.

The Public Goods Fund:

This treasury will simply grow in order to be deployed to help in global crises. It will be controlled by DAO members with reputation. The idea is that it continues to grow forever, like a college endowment, and a portion of that growth will be used to help people in much the same way the Red Cross does.

Things to maybe revisit:

Might be helpful to have a fluctuating interest rate (fixed once a loan is locked, but variable based on how much risk the market wants to tolerate).

As of now, the governance token has no use case other than issuing reputation. If we give it utility, we could potentially use it to offset bad debts similar to Reflexer.

I actually really love the idea of releasing the loans in stages as more pictures are taken of what the money is used for. I took it out in the effort to widen the potential uses for the loans, but I think we should maybe put it back in.

I also may want to change it so someone has the option of choosing the amount they want to borrow (in Level 1) from $1000 to $5000 (in multiples of $1000, which would be what each installment is.

We can keep the DAO treasury and the Public Goods treasury in BTC and Eth and anything the DAO decides. This maybe gets your marriage of BTC and ETH community buyin.

The goal of this DAO is to get money into the pockets of Ukrainian farmers who need the help. Our thesis is that this is more long-term viable if we structure it as an investment opportunity as opposed to a charity. In other words, we want to allow people to invest in fellow humans similar to how we invest in companies today, but in a decentralized way that optimizes for speed.

The challenge is structuring this so that investors are paid back and the project isn’t taken advantage of by people who just want to take the money and run. If the structure of the organization is decentralized/nonhierarchical, and if the investments/loans are not collateralized, what incentives can we put in place to ensure that investors are made whole?

This paper attempts to answer this question.

Investors:

Investors will contribute funds in the form of stablecoins into the “LP treasury” and receive an equivalent number of LP tokens in return. For example, 1 dai deposited in the LP treasury results in 1 LP token deposited into the contributor’s wallet. At any time, an investor may exchange their LP tokens back for stablecoins, effectively exiting their position. Notably, this can only happen if there are enough stablecoins currently in the treasury to cover the exit request. If there are not enough (because they are being loaned to Ukrainian farmers), investor exit requests will enter a queue and be settled in order of when the requests were made.

Farmers will pay a flat yearly interest rate of 7% on the loans they receive from the DAO. To break this 7% down; 4% will go into the LP Treasury, 2% will go to “U token” holders, and 1% will go to the DAO treasury. Of the 4% that goes to the LP Treasury, 75% of that will trigger new LP tokens to be issued to investors. The remaining 25% will just build up the LP treasury over time so that exiting an LP position doesn’t require waiting as long in the queue (this cushion also provides extra insurance against delinquent loans).

As an example, let’s assume an investor deposits 100 dai into the LP treasury. She receives 100 LP tokens in return as “I-owe-you’s.” She can turn around and immediately exchange the LP tokens for her 100 dai, but if there is a queue she will be put at the back of the line and have to wait until there is enough money in the LP treasury (which will come from both new investors and payments from farmers) to cover all of the exit requests that came before hers. (Farmers waiting on loans will have their own queue that is active only when there is no investor exit queue. In other words, investors get first dibs when requesting their money back.)

When our investor enters the queue to exit her position, her daily LP rewards will still accrue but at 1/2 the rate. This is to discourage a scenario in which investors always immediately enter the withdrawal queue after depositing, only to reinvest when they receive their money (in order to have constant quick access to their funds), which is a scenario that would lead to farmers rarely getting loans (as their requests only trigger when there are no investors in the withdrawal queue). The goal is to have investors put money into the pot and leave it there until they actually want to exit the project.

To continue…if she doesn’t immediately withdraw her funds, she will automatically begin earning interest payments in the form of LP tokens. If there are 10,000 LP tokens in total at a given time, issued to all investors, her share of 100 LP tokens will equal 1% of the pool. If the farmers make $300 worth of payments the next day, and $5 of these happen to be interest payments (meaning $295 is paying down initial principal), the investor will receive a pro rata share of 3/7 of those interest payments. Since interest payments were $5, $5 * 3. / 7 = 2.143 LP tokens will be issued to investors. Since our investor holds 1% of outstanding LP tokens, she receives 0.02143 LP tokens (with a corresponding value of $0.02143).

To complete the picture, even though these won’t be discussed until later in the paper, here is the breakdown of what happens to the full $300 in farmer payments for the day:

$295 in original principal payments goes into the LP treasury

4/7 of the interest payments ($2.857) also goes into the LP Treasury

1/7 of the interest payments ($0.714) goes into the DAO Treasury

2/7 of the interest payments ($1.429) goes to clusters holding a “U” token (something a cluster gets when every farmer in his cluster has been paid off). This will accrue in a 12/22 multisig belonging to all 22 members of the cluster. In other words, the cluster of farmers, being members of the same community, will get together and vote on how to use this money to benefit themselves or the community.

And as mentioned before, LP tokens are generated for 3/7 of the interest payments (2.143 LP tokens worth $2.143), which are distributed automatically to current LP token holders based on the number of LP tokens they currently hold in their wallets compared to the total LP tokens outstanding.

As an incentive to kickstart the project, investors who contribute at least $100 to the protocol will receive an NFT. We could do tiers where $1,000 gets a different type and $10,000 is the most elite. Since the project is supporting a good cause, these could be coveted and really get things rolling.

The loan side of things:

Since there is no centralized entity, there is no viable way to store kyc information long term (though we may rely on limited kyc info that we already have access to in order to onboard the first farmers, as discussed later). As a decentralized DAO with fluid membership, there is no clean way to hire an HR department charged with securing this information. Further, it is our hope that our model can be used in the future to help other groups of people in other countries, as needs arise. Creating a system that does not rely on kyc requirements will allow us to respond much more quickly to crises.

Without kyc, it follows that we will have no way to secure collateral for these loans with any real-world assets. In defi, loans are collateralized by cryptocurrency, but the point of this project is to help farmers who may not have money to buy crypto. (If they owned crypto, they could just use a defi lending platform like Aave and wouldn’t need a project like ours.)

Further, in traditional finance, loans are backed by a legal system that helps ensure they are repaid. Without kyc or any of the long, complicated contracts we hope to avoid in the interest of speed and corruption resistance, we will not have access to this legal safety net either.

So we must have another way to identify loan recipients and make sure they are incentivized to uphold the terms of the loan.

We propose two mechanisms to achieve this, which combine monetary incentive and, to put it bluntly, peer pressure from neighbors.

Mechanism #1:

In order to secure a loan in the very beginning, farmers will need to create a profile on the platform, which will operate much like a social media platform. The profile will be connected to a decentralized ID from something like Proof of Humanity or BrightID, which will help ensure that people aren’t applying for multiple loans.

Each farmer will be required to create a video of themselves explaining what they intend to buy with the loan and where it will go. Loans will only be issued for purposes that can be reasonably verified. For example, it is easy to see a video of a location without a structure, and then a video two months later of the same place with one (more on this later).

The video will also tie them to a particular “Community,” or a preset geographic region roughly 500 km2 (the size of a town and surrounding area). We can use geolocation services for this, but we need a way to obfuscate it so that the platform reveals what Community someone lives in without revealing their exact location (for privacy purposes). We will also need to make sure that people live sufficiently far from each other (>1km) so that multiple members of the same family don’t belong to the same cluster.

Finally, they will need to connect with a cluster of 20 other farmers from the same community. This cluster will act as a unit in multiple ways and members will be incentivized to encourage and help each other pay back their loans.

Any farmer can start a cluster. In order for another farmer to join the cluster, they must request entrance and one farmer in the cluster must approve the request. Then there will be a 7-day period in which any other cluster member can deny entry to the new member. Once the seven days passes and the new farmer joins, they can opt to exit the cluster at any time as long as they haven’t already received funding. Alternatively, a cluster can kick someone out by majority vote as long as that person has not yet received funding.

Once a full cluster is formed with 21 farmers, the cluster’s status will change from “forming” to “pending” and is now considered a Level 1 cluster. Only one Level 1 cluster may be active in any Community at any given time. When there is enough money in the LP Treasury to justify activating a new cluster ({# of unfunded loans in active clusters} / 4), the DAO can select a new cluster to become “active,” meaning their farmers can start requesting loans. This will be done by vote of everyone in the DAO. Votes will be weighted based on reputation (more on reputation later) and will last for 3 days. No quorum is needed, and the cluster with the most votes by the end of the week wins. Winners will probably be the clusters who market themselves the best with videos and photos, provide the most evidence that they are all in the same community (group photo maybe?) and not members of the same family, and convince investors that they are trustworthy and will pay down their loans.

Spinning up a profile will be permissionless, but we do have a small ace in the hole to kick start the process. Backcountrydrifer (BCD) already has kyc information (including credit history) on many Ukrainian farmers. BCD will contact those farmers with high credit scores and encourage them to set up profiles in the beginning. This will start us down a less risky pathway initially. BCD will not share this information with anyone else in the dao.

To continue, the order in which farmers get loans will be selected at random by the system. Each loan will be for $5,000. Only one farmer will get a loan at first. In order for a second farmer to get a loan, three things must take place:

The first farmer (we’ll call her “Farmer 0”) must pay off 25% of her principal (creating a “healthy cluster”)

Farmer 0 must submit a video showing the structure she intended to build with the money, based on her first video (this is to ensure the loans are going towards what they were intended for as opposed to being used for a ponzi-type scenario to steal funds from the LP treasury).

Someone with reputation in the DAO must propose a motion to release the funds to the next farmer, and this motion must not be opposed. Then the farmer must finalize the acceptance of the money. This step will be game-ified and explained in more detail later.

If the above 3 conditions are met, two more farmers will receive their loans. These two farmers will be in the “Farmer 1” tier.

The next tier (the Farmer 2 tier) will contain 4 farmers (see diagram below), and will receive loans in the same way as the Farmer 2 tier did, except that both Farmers 1 must have paid off 25% of their loans and Farmer 0 must have paid off 50% of her loan (if these percentages are met, we would say the cluster is “healthy.) This trend continues, with every farmer on a tier receiving a loan as long as the cluster is “healthy.” A healthy cluster is relative to the farmer wanting to open the loan, and is defined as follows:

4 or more levels above: 100% principal paid off

3 levels above: 75% principal paid off

2 levels above: 50% principal paid off

1 level above: 25% principal paid off.

(See diagram below for a visualization of this.)

By the time it’s all said and done, 21 farmers will have received loans. Just to reiterate, the health of the whole cluster is required for any new loans to be given out, so that if even one farmer hasn’t met his required %, no new farmer in the cluster can receive a loan. In this way, if there is one farmer holding up a community from receiving more loans, there will be an incentive for the community to come together and help that farmer pay down their debt. No new clusters in a geographic Community can receive any funding until the active cluster has paid off its principal.

A “cluster” is defined as the group of loanees starting with Farmer 0 and going all the way through Farmer8 (the entire diagram shown above).

What if someone in the cluster no longer wants a loan by the time their turn rolls around? What if someone dies in this interim? This is why the farmer must sign a transaction finalizing their acceptance of the money. If the money has been released, the farmer will have one month to accept it. If they don’t, the money goes back into the LP Treasury and the farmer moves to the end of the queue among the farmers in the cluster. Once it becomes their turn again, the process will repeat, and if they also miss that window, they will be kicked out of the cluster.

To elaborate a point, clusters existing in geographic Communities serves several purposes. First, it incentivises farmers to pay off their loans in order to help improve the welfare of their neighbors. If several neighbors are in need of capital but they can only get it if you keep your loan healthy, you’re likely to feel social pressure to do so. This only works if you know your neighbors, and if you are the only thing standing in their way of gaining access to this capital. If a farmer from another cluster (another community) is able to approve your neighbor for a loan, this takes the pressure off of you to pay your debt.

Also, this helps ensure that the farmers know each other well enough to make judgment calls on who they believe are credit-worthy when forming their cluster in the beginning.

Mechanism #2:

Any cluster which repays all its loans in full will receive a “U” token. This token will entitle a treasury, controlled by the cluster, to receive a portion of the overall interest repayments from the protocol. As noted above, 2/7 of all interest payments will be paid to “U” token holders in the form of stablecoins. As mentioned above, this treasury will take the form of a 11/21 multisig consisting of every farmer in the cluster.

Added incentive: if a cluster pays off all its loans within 3 years of Farmer 0 taking out the first loan, the cluster will receive an extra .5 U tokens (a 1.5x booster). These U tokens will reside in the cluster’s treasury and may be sold just like any other token, along with all future rewards.

NOTE: anyone can pay down anyone else’s loan. If a cluster is losing out on their U token due to one farmer who isn’t paying off his loan, neighbors can help that farmer out for the benefit of the group if they so choose. Other deals could obviously be negotiated outside of the DAO as well, etc.

In the Weeds:

As mentioned before, loans are intended to fund certain predetermined projects specified in video format by the farmer requesting the funds. The projects must be reasonably provable (like building an immovable structure). This is to discourage a farmer taking the funds to buy a tractor, then taking a video of a neighbor’s tractor as their proof, and using the loan funds to keep the cluster healthy until the point at which a colluding cluster could steal the maximum amount from the DAO (which happens to be $37,500). At the end of the day, it will be up to the DAO members to decide if everything is above board.

Once the funds are released, the farmer will use the funds as intended and post a second video showing evidence of the completed project. This could be a video of the new structure, or even a picture of a receipt for seeds and a video showing the seeds being cast in the field.

Once this has been done, if the cluster is healthy, the next farmer will be up for their loan. Someone with “reputation” in the DAO (explained later) must make an on-chain proposal to release the funds to the next farmer. The proposal will sit for a week, during which time anyone in the DAO can oppose it. If no one opposes it, the motion passes by “lazy consensus” and the next farmer receives their loan.

Note: the person who proposes the release of funds will receive $40 of the loan (and another $40 of the loan will go to the Public Goods Fund, discussed later) so the farmer will actually get $4920 instead of the full $5000. This is how we game-ify efficiency in payments to farmers. Anyone with reputation in the DAO will be able to earn $40 if they are the first to propose a valid release of payment to a farmer. They must do their due diligence, however. We will be using Colony for this, so in order to make a release-of-funds proposal, the proposer must stake $40 of their own money. If they are hasty and the previous farmer clearly hasn’t provided enough evidence that they’ve used the loan for its intended purpose, someone else with reputation will have grounds to oppose releasing the funds (and 7 days to do it). To do so, they must stake $40 of their own money. Then it will go to a vote, open to anyone with reputation in the DAO. After the voting period, whoever loses the vote will lose their staked $40. The winner gets their stake back as well as a portion of the loser’s stake, which they will also share with those who voted. Note that voting ONLY HAPPENS when there is a disagreement over whether the funds should be released. If we rarely have actual votes, it reduces the risk of voter fatigue among DAO members.

The loans themselves:

The loans will accrue interest continually. It is completely up to the farmer when he wants to make payments on the loan. If he decides to never pay, the interest will simply continue to grow. However, this will effectively put an end to DAO investment in this community until the loan is paid down to beneath the levels shown in the diagram above. That extra 1% worth of interest that flows into the LP Treasury without triggering the issuance of LP tokens (explained above) will hopefully offset the delinquent debts that will inevitably happen. If a neighborhood (cluster) wants to re-enter the program, neighbors will have to figure out a way to make the cluster healthy again.

The Skeleton Crew and reputation:

There will need to be a skeleton crew to set the DAO in motion. These will be the members with the most “reputation.” Reputation, in Colony, is accrued as a DAO’s native tokens are doled out to members. For example, if the DAO pays someone 1 native token, that person also gets 1 reputation point. Our native tokens will not hold value and cannot be traded. They will simply be locked in recipients’ wallets, and their only purpose will be to allocate reputation.

Reputation is needed to make proposals, and the amount of reputation someone has directly influences the amount of weight their vote holds when a vote occurs. Reputation degrades over time, with a half-life of 90 days, so that as the active members of the DAO change, the allocation of reputation can move to reflect the current state of things.

Tokens (and thus reputation) will be doled out once per month. 10,000 tokens per month will be issued: 5,000 to investors; 4,500 to the Skeleton Crew; and 500 to U Token holders.

Investor’s tokens will be doled out automatically based on the amount each investor has supplied to the LP Treasury as a % of the total number of LP tokens in existence. Since the investors supply the funds, it makes sense that they have a say over whether or not these funds are released to the specific farmers they are investing in.

The 500 native tokens issued to U Token holders is to give them the reputation they need to propose the release of funds (explained before), which allows them to take part in another potential revenue stream and also to get more involved in the DAO. They will simply be divided evenly among all farmers who belong to a cluster that is totally paid off.

The 4,500 split among the Skeleton Crew are to ensure that a group of people can always exist to keep the gears of the DAO turning and the values intact. These folks will originally be the group who brings the DAO into existence, so they will naturally be aligned with the values of the project from the beginning. Over time, as new people emerge who want to participate, this monthly token allocation will allow the decision-making power to shift like a slow-moving amoeba blob to the people who are currently adding the most value. Hopefully, many of these new members will be Ukrainian farmers who have benefited from and believe in the project.

These 4,500 tokens will be split up along all of the Skeleton Crew using Coordinape. Basically, everyone in the group will receive 100 votes each month. By the end of the month, everyone is encouraged to have given out each vote to other members based on the value they believe these other members brought to the group. (No one can vote for themselves.) 4,500 tokens will be distributed based on the percentage of total votes each person received. In order to bring a new person into the Coordinape voting round (and therefore into the Skeleton Crew), 3 current Skeleton Crew members must vouch for them. In practice, if someone is spending a lot of time adding value to the group (going around meeting farmers to educate them on the program, spending time in discord answering questions, etc), then Skeleton Crew members will probably take notice. If three of them decide this person should be eligible to receive voting power, they will nominate him and then the rest of the Skeleton Crew will have the ability to give him Coordinape votes (and therefore reputation).

The idea is that influence moves slowly and intentionally from the people who have it to new people who have been vetted by the group and proven themselves aligned with the values of the project. Also, it’s an ongoing process, so as long as half of the skeleton crew is honest and values-aligned, decision-making power will be taken away from toxic members as their true character is discovered by the rest of the group. Confrontations don’t even need to happen — it can all happen in a very fluid way.

The “DAO treasury” exists partly to compensate these Skeleton Crew members, especially important if working for the DAO becomes a full time job for someone. This treasury will also be for potential lawyer fees or anything else that comes up, and allocation of these funds in whatever direction will be entirely up to DAO members with reputation. The duties of this group will arise as they arise. Maybe it’s going out into the field to investigate some potential fraud (as in one cluster decides to stop making payments and tries to secure new loans from a cluster outside of their community by defeating the location mechanism). Maybe it’s spending time answering questions on Discord. Keeping up the website, fixing bugs in smart contracts…all this stuff will be under the purview of the Skeleton Crew.

Social Media-style UI

The app will have somewhat of a social media vibe. After all, we are asking people who could invest in over-collateralized defi to instead invest in totally uncollateralized quasi-anonymous individuals in a war-torn country. We are asking people to take on more risk, and part of their reward is the knowledge that they are A) helping to stabilize the world (not easy to observe in real time) and B) helping real people who desperately need that help (very easy to observe via social media posts).

Farmers will be encouraged to write about themselves, post photos and videos, the usual social media stuff. The better they market themselves, the more they stand to benefit from the project.

People’s profiles will include certain symbols and numbers that represent their progress as a loanee, and thus serve as makeshift credit scores.

. -A percentage which represents how much of their current loan is paid off

. -A $ amount showing how much interest has accrued

. -A percentage that shows how much of their cluster’s overall original principal is paid off

. -A $ amount showing how much interest their overall cluster has accrued

. -A happy symbol if the cluster is “healthy”

. -A number 1–21 showing how many farmers are in the cluster currently

. -A number showing the level of the cluster level (a factor of how many times the cluster

has paid off all of its debts)

-A number showing how many loans they have personally paid off (a personal profile

rank, as opposed to the cluster rank)

. -A “U Token” symbol if this cluster has earned a U Token (and an extra fancy symbol for

clusters who receive a .5 U Token boost)

.

.

Level 2 Clusters

When a full cluster pays off all of its debt, the cluster graduates to Level 2. This opens them up to more funding at better terms. Here’s how it would work:

Any farmer in the cluster who wants another loan can apply through their profile by clicking a button, stating how much they want, explaining what the loan will be for, and getting at least 5 other farmers from the cluster to vouch for them (this is a mechanism to weed out the riskier cluster members). Large loans here could be very dangerous for investors to agree to, because the larger the loan, the greater the incentive the farmer has not to pay it off. Any loan over a certain amount ($10,000?) will have a warning sign at the top of the page explaining that large loans equal higher risk.

This farmer is requesting a loan not from the LP Treasury like Level 1’s do, but rather directly from investors, so the more appealing his request is, the more likely someone will want to invest. The fact that the farmer has already paid off one loan should give investors more confidence and earn the farmer an opportunity at better terms. However, the fact that the risk of default is not spread across the whole LP Treasury makes the loan more risky. Therefore, these loans will both be more lucrative for investors and less expensive for farmers. The loan will carry an interest rate of 5% (or 6%) instead of 7%, broken down as follows:

. 4% to investors

. 1% to the DAO Treasury

1% to the Public Goods Fund (this is toggled to 0% if the farmer posts at least 1 video

per month updating the investors on their progress)

To illustrate, let’s assume that a farmer has asks for a $6,000 loan. A potential investor filters the app for Level 2 investment opportunities and finds this farmer’s profile. The farmer has put up a video showing his farm and all of the impressive work he has done so far. There is demand for the farmer’s produce, but in order to scale to the next level he’ll need this $6,000 loan. The investor is convinced and puts $1,000 in stablecoins down on his loan. This $1,000 sits there as if in escrow (maybe we can improve on this so it’s generating a yield, but for now let’s assume it just sits there.) The investor may pull it out at any time up until the point that other investors fill the loan request all the way to $6,000. When the $6,000 mark is hit, the money goes to the farmer and the interest charges begin.

Since the Level 2 model involves a much more direct funding relationship between investor and farmer, we can lean into this dynamic to potentially secure more funding for farmers. If an investor feels a human connection to a farmer through their profile, the investor is more likely to invest. Farmers in Level 2 clusters will have a high incentive to post videos and market themselves up until the point in time that they get a loan, but an investor will be very interested in how their investment ends up helping the farmer after the loan goes out. Therefore, the protocol will offer a 1% discount on the loan interest rate each month that the farmer posts at least one 2-minute video showing how they are, their progress, etc. These videos can receive likes from the community and farmers can make themselves more visible this way (a “trending” farmer could potentially attract more money). The farmers can also accept small payments from viewers that go toward paying off their principal. A highly charismatic farmer could get her whole loan paid off in this way just by making good videos and being popular.

(A quick note: While charismatic farmers stand to reap more benefits from this model, we are not blind to the fact that charisma neither increases the likelihood of loan repayment nor is a fair metric to choose farmers who need help. We have tried to create a system that works for everyone, but have chosen to lean into the tools at our disposal to attract attention and money from investors. Since investing in this project will likely be less lucrative than other defi investments on a risk-adjusted basis, creating online relationships and stories is one way to raise more money to help more people.)

Similar to a new cluster, once this farmer pays off 25% of his loan, another 2 farmers may request a Level 2 loan in the same way as the first one did. Actually, all of the farmers can request one, but only the next two that attract full funding will actually get a loan. Then, once these first 3 farmers have healthy loans, 4 more may be approved, as so on until either the whole cluster fills again or all of the open loans are paid off and the process starts over.

Another difference here is that in Level 2 clusters, farmers may join together to kick out a member. If >50% of the farmers in a cluster vote to kick someone out, they will be removed from the cluster and the whole platform itself. This mechanism allows clusters to self-police and weed out any high risk loanees. As an example, let’s say one farmer in the Level 1 cluster ended up being a deadbeat loanee. They took the loan and made no attempt to pay any of it back. The rest of the farmers really wanted the benefits that come from the cluster paying off its entire debt (a U token, access to Level 2 loans, and other perks on the social media portion of the app), so they pooled money to pay off that farmer’s loan for him. They don’t want to have to do this again, and the DAO doesn’t want that kind of person taking out any more loans, so the farmers have the ability to give him the boot.

An active Level 2 cluster will have as many as the original 22 farmers or as few 1 farmer with open loans. It all depends on how many of the farmers are in need of a loan at a given time. Once every farmer with an outstanding Level 2 debt has paid it down, we are back to square one. If any farmer wants a loan, they just make a request through their profile and if it’s funded, they become the new Farmer 0. And on it goes.

Note: if a farmer pays off his Level 2 loan and the cluster is healthy, he can jump back in for another loan right away. The more loans someone takes on and pays off, the higher their personal profile ranking goes and the more attractive they will be for investors to invest in. It is our hope that these people who prove a high level of responsibility may also be attractive to potential partners who can reach out on our platform and secure business deals totally unrelated to our project. Also, this ranking can be part of a decentralized credit score that other projects can use when offering uncollateralized loans to people. A pseudonymous, blank slate credit score for the world.

These farmers will have the ability to market themselves in any way on the DAO’s platform, whether that’s marketing their goods locally or globally, reaching out for a more traditional partnership unrelated to the DAO, or anything else they can think of. When a farmer brings in more income, it improves their ability to pay back investors. When anyone succeeds, everyone benefits. The social media aspect will benefit Level 2 clusters more than Level 1s, so Level 2 farmers will probably put it to more use. This in itself offers an incentive for a farmer to make it to Level 2 by paying off their original loans.

The Public Goods Fund:

This treasury will simply grow in order to be deployed to help in global crises. It will be controlled by DAO members with reputation. The idea is that it continues to grow forever, like a college endowment, and a portion of that growth will be used to help people in much the same way the Red Cross does.

Things to maybe revisit:

Might be helpful to have a fluctuating interest rate (fixed once a loan is locked, but variable based on how much risk the market wants to tolerate).

As of now, the governance token has no use case other than issuing reputation. If we give it utility, we could potentially use it to offset bad debts similar to Reflexer.

I actually really love the idea of releasing the loans in stages as more pictures are taken of what the money is used for. I took it out in the effort to widen the potential uses for the loans, but I think we should maybe put it back in.

I also may want to change it so someone has the option of choosing the amount they want to borrow (in Level 1) from $1000 to $5000 (in multiples of $1000, which would be what each installment is.

We can keep the DAO treasury and the Public Goods treasury in BTC and Eth and anything the DAO decides. This maybe gets your marriage of BTC and ETH community buyin.