While his plans are still in their early stages, Dr. Adel ElMessiry wants to end a system that traps millions of people in the debt cycle.
He is the founder of the Decentralized Lending Network, a platform with the goal of creating an open financial network enabling interest-free micro loans backed by a borrower’s social reputation. He is currently developing the concept and invites feedback at dln.org.
Dr. ElMessiry was born in Egypt and lived across Europe as a child. He has lived in developing economies. People trying to get ahead in such environments, and those with lower incomes in advanced economies, struggle to advance but often cannot.
“In modern slavey they are not in shackles, they are in debt,” Dr. ElMessiry said. “This group of people who cannot get through the system, they are bound forever to work tirelessly in the same spot and they cannot move out of it.”
And existing systems work against these people, he added. They don’t have the money to invest in high-yield opportunities, not that they ever get wind of them anyway. Fees to open a bank account and the need to maintain a set balance work against them. You also need a reliable address and a job to access some financial services.
Dr. ElMessiry has the background to support his ambitions. Armed with a Ph.D. in computer science, natural language processing and machine learning from North Carolina State, he cofounded and later sold a health technology company, discovering he enjoyed entrepreneurship.
Blockchain technology captured his interest and he was intrigued by trust networks, but found early blockchain efforts lacking, as they were slow, expensive and in some cases impractical.
“Give the unbanked a token? How does it help those guys?” Dr. ElMessiry asked.
That led him to leverage the good side of DeFi, which has the ability to more efficiently produce financial transactions. There is plenty of room for improvement, as someone looking to send instant cash from the United States to a relative in need overseas is out of luck. Wait four days, pay a large chunk in fees and maybe see 60 per cent of the original sum get to the other side is what you can expect.
Microlending could solve the problem, Dr. ElMessiry believes. Already successful in the developing world, combine it with distributed ledger technology and you’re on to something.
“The idea is we need to create a decentralized network that is utilized on social staking to provide fee-free, zero per cent loans to borrowers while still rewarding bankers and providing terms for a liquidity pool,” he suggested.
Conventional borrowing of course requires a borrower and lender, with the former posting collateral. Not everyone has collateral to deploy, but they do have friends and a reputation.
“Social staking aims to unlock your social network,” Dr. ElMessiry said. “A borrower may not have collateral but their friends may.”
All parties would have a stake in the network. Those backing a loan or contributing to network development receive a governance token that enables them to have a say in the its development. A decaying reward curve is applied so future network participants can have a say in its development. Each participant’s network assets will be tracked through a nonfungible token.
Dr. ElMessiry is in discussions with organizations in the United States and across Africa to develop use cases for the Decentralized Lending Network. He looks forward to meeting impact investors and the blockchain community so they can give feedback and help make it the best it can be.
“Why can’t we create a system that pools the community around people and help them grow from there?” Dr. ElMessiry asked. “Back them with a loan they can repay.”
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