Introduction
Last updated
Last updated
Pooling is the structural primitive that underpins modern finance. Corporations pool shareholder funds in the hopes of generating a return for the corporation and its shareholders. Banks pool account holder deposits and loan them out to generate a return for the bank and account holders. Insurance companies pool premiums from policyholders to create a return for the Insurance company and assume a policyholder’s risk. Charitable organizations pool donations to support causes and campaigns. Pooling is one of the most consequential achievements of modern finance, but it has three major flaws: principal risk, high cost, and limited access. BennyFi™ is a Decentralized Pooling as a Service (PPaaS) platform that aims to address all three of these issues.
The possibility of total principal loss makes traditional project funding high risk. BennyFi seeks to minimize principal risk by using staking rewards that the principal generates rather than the actual principal to fund projects. This approach significantly lowers principal risk, making staking pools risk appropriate for a larger audience. It also makes the principal reusable. Unlike traditional social funding platform like GoFundMe™ or KickStarter™ that pass the principal along as a donation, BennyFi funds projects with the staking rewards generated by the staked principal. Once the pool is completed, the principal is returned to the participant to be recycled into another staking pool. Although BennyFi is designed to reduce principal risk, the system cannot protect users against all possible risks. Please see our “Risks” section for a description of other possible risks.
Let’s address these two together. Access is a function of cost, the less the cost, the more accessible the service. Today, financial pooling is profitable, proprietary, expensive, and inaccessible. BennyFi is designed to disrupt the status quo. As you will read below, BennyFi is currently providing pooling services to users who lack access to traditional financial services, are unbanked, and new to blockchain.
BennyFi started as a project in May of 2019. After many iterations, it became apparent that the underlying pooling mechanism was unique, disruptive, and had many applications beyond a lottery. The decision was made to convert BennyFi into a Pooling Platform as a Service (PPaaS) that anyone can use to create pools that support various use cases. In August of 2021, BennyFi launched a proof of concept (POC) in Guatemala to validate our concept and assumptions. The POC registered over 4000, unbanked users and completed over 1400 pools.
The POC confirmed three critical assumptions:
1. Reducing or eliminating operational and transactional costs makes financial inclusion possible
2. Eliminating principal risk makes project finance more appropriate and accessible to a larger audience
3. Intermittent reward behavior creates a strong incentive to encourage sound financial decision making