Debitum Review

10th October 2019

So what is the Debitum Network? 

It is a decentralized p2p lending marketplace from Latvia, that started offering business loans to worldwide companies in September 2018. It’s the first one that is based on blockchain in the Ethereum network, and its was created after an ICO (Initial Coin Offering) during 2018.

So far, it managed to finance loans worth a bit over 8.9 million EUR, and the platform already has more than 2900 investors registered. The average interest rate for the loans available is 7.84%, but slowly that it starting to offer more loans in the 9-11% range. (All loans are covered by their buyback guarantee)

Up to now, I have invested 1.000€ with Debitum, for about 45 days. One of the main points I like about this platform is the transparency that characterizes successful blockchain products – you can find almost all the information about the creators and legal documentation on their website.

Apart from that, they boast a meticulous risk-assessment process that allows them to have even lower default rates. (They even have their default ratio posted on their website) Their lower-than-competition XIRR gives me a feeling of further robustness in the long term. (the market average stands at about 12% as of now)

Buyback guarantee works similarly with the other platforms, in most cases a “bad loan” will be bought back from the broker – loan originator. (some loans though are not covered by the loan originator guarantee) It should be mentioned though that late loans when payed will include earned interest. As for diversification, many of the originators are active in other p2p platforms as well, so I don’t think that from a geographic point of view it helps diversify away from the Baltic region.

Auto-invest settings

At first I had set my Auto-invest to only invest in loans with a Credit Score up to “B” (since the interest difference with “C” loans was less than 1%) but I was seeing a lot of cash-drag so I decided to go up to “C” rating. With this setting, there is no cash drag at all. 

The verdict

Debitum network is new platform to the p2p lending space, with a technologic edge due to their origins from the blockchain space. Now whether that really makes a difference, is something that will be seen in the following years. 

Nevertheless, they have abstained from bringing above-average loans to the market, and that certainly is a positive. (apart from becoming a real company after their $18 million ICO)

For now, I will keep my current investment volume and will wait until the end of the year to see if they will maintain their performance, interest wise.

 

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