A small review on Debitum Network
Debitum Network is a decentralized p2p lending marketplace from Latvia, that started offering business loans to worldwide companies in September 2018.
So far, it managed to finance loans worth a bit over 4.6 million EUR, and the platform already has more than 1.800 investors registered.
The average interest rate for the loans available is 9.95%, and the minimum amount to invest in a loan is 10 EUR.
- Loan types: Business loans, Invoice financing, Trade financing
- Loan terms: from a few days up to 3 years
- Interest rates: 8% to 12%
- Fees: no fees
- Minimum investment: 10 EUR
- Currency: EUR
- Secondary market: no
- Auto-invest: yes
- Buyback guarantee: yes, not on all loans
- Bonus: 10 EUR bonus when you invest at least 250 EUR on the platform (with the link below)
What do I mean by a decentralized p2p lending marketplace
Debitum Network is an ecosystem containing 3 different types of actors:
- Borrowers, which are small and medium-sized companies looking for financing
- Investors, willing to lend money to businesses for an interest rate
- Service providers, offering their expertise in risk assessment, credit insurance and debt collection
Debitum Network puts these 3 types of actors in touch and makes sure borrowers find a credit assessment company when they request a loan and investors rights are protected by a debt collection agency when borrowers can’t/won’t pay their loans.
The platform aims to be decentralized by employing the use of their proprietary DEB token, with which different actors pay (are paid) for services they receive (provide).
The below process flow taken from their website explains better how this works.
Investing in Debitum Network
The loans offered on the platform are already pre-funded, and we only see loans offered by loan originators (lending companies). The loan amounts range from a few 1000s EUR to 1 million EUR. The loan terms range from less than a month to up to 3 years, although this limit might increase with the addition of new loan originators.
While the minimum investment is 10 EUR, the minimum amount by which you can fund your account is 50 EUR. If you try to add less money to your account, you might get an email from Debitum Network saying that the minimum amount is 50 EUR, but they’ll approve this time your transaction.
All loans available are secured with some assets and most of them come with a buyback guarantee. Depending on the loan originator, some of the loans are bought back while paying back the principal and accrued interest, while others only pay back the principal.
Since the platform is relatively new, there aren’t that many loan originators so far: Debifo (owned by Debitum Network’s founders), Factris, Chain Finance, Trade Backing and Aforti.
The good news is that the platform is constantly growing and adding new loan originators. Aforti Finance only joined Debitum Network in April this year.
The available loans are rated from A to F and based on their credit rating an interest rate is offered. So far, the interest rates ranged from 8% to 12%.
One cool thing Debitum Network offers is that borrowers pay a penalty when they’re late with the loan payments. Depending on the loan, sometimes this is lower than the interest rate and sometimes is a lot larger.
This is how a typical loan on the platform looks like:
If you don’t plan to spend too much time on the platform looking for loans to invest in, you can also set up an auto-invest profile and let it do the work for you.
The only bad thing Debitum Network suffers from is that there’s no secondary market. It’s impossible to exit your investment ahead of term.
Who can join Debitum Network
Anyone can join the platform, as there are no restrictions based on country. Debitum Network’s plan is to also be used by businesses all over the world for financing.
The DEB token
The DEB token is supposed to fuel the entire activity on the platform and link different service providers in the lending process.
Borrowers need DEB tokens to pay the platform fee, credit assessments and insurance. Investors would pay in DEB tokens a debt collection agency to handle defaulted loans recovery. Since nobody actually uses DEB tokens in real life, the process seems rather artificial. Borrowers use fiat money to buy DEB tokens and pay credit rating agencies. Credit rating agencies don’t receive DEB tokens, because they’re converted back to fiat money when they withdraw their earnings. And so on.
Debitum Network did an ICO at the height of the crypto craze in 2017. It managed to raise 20.000 ETH (16.5 million USD at the time). Since then, crypto prices collapsed, and a token bought at the time of the ICO with 0.1 EUR collapsed to 0.003 EUR at the beginning of 2019. As you can imagine, ICO investors are not too happy right now.
The selling point of the DEB token was that as the platform grows, more and more DEB tokens will be used, and the limited supply of tokens would make its price increase. So far, it doesn’t seem to be the case.
It doesn’t help that DEB tokens are only available on a few platforms like Kucoin or Latoken.
If you’re interested in the token, you can read more about it on the Debitum Network site.
Summary on Debitum Network
Debitum Network is certainly an interesting platform if nothing else. Its use of the DEB token to help decentralize the activities involved in the lending process could make it a great platform in the near future.
It does offer buyback guarantees on most of its loans, and this makes it at least a safe platform to invest in. While the advertised returns are not as high as others promised by platforms like Envestio, Kuetzal or TFG Crowd, it’s still a good platform to diversify your portfolio.
It is still small, with less than 2000 users, at it needs to invest a bit in marketing in order to get more investors to the platform.
For now, I’m playing around with 150 EUR invested in about 15 different loans and monitor how they perform.
If you wish to try out Debitum Network, you could use my referral link and win a 10 EUR bonus when/if you invest at least 250 EUR on the platform.
A small review on Debitum Network - Nerd Factor