The social enterprise, native to technology blockchain, EthicHub, activates its Compensation Fund to cover investors in failed projects, who will receive the principal of the loan contributed plus the interest accrued to date. This was reported to Cointelegraph in Spanish, through a statement.
After almost three years working with small communities of farmers Unbanked, offering them international financing, the communities register their first default: the group of farmers from Chanjalé has not complied with the conditions stipulated in two of the projects for which they had requested financing.
The investors who financed this community will not be affected, as EthicHub has developed a system in which the hundreds of farmers who have complied outweigh the 1% who have not.
As explained in the statement, thanks to the design of the token that sustains their Compensation System, they have managed to transform the trust generated into a valuable asset: Ethix, which, in addition to other utilities, acts as liquid collateral to guarantee the loans of their renowned platform. The Compensation System provides for the liquidation of the tokens in the crypto market, in sufficient quantity to compensate investors.
At the end of last year, EthicHub presented to the blockchain community the Ethix token and its role within the ecosystem of social impact that they are building. Its main objective is to provide liquid collateral to all its loans, so that more users are encouraged to invest in farmers.
The Fund was constituted with the exact half of all Ethix issued and with each new loan granted, 4% is destined to increase said Fund, generating a sustainable demand for Ethix while increasing the security of the platform.
Another characteristic of the compensation fund is that anyone can acquire the Ethix tokens and also act as guarantor of the farmers. This possibility gives Ethix-stakers a passive income to compensate for the moderate risk that exists of being able to lose their Ethix in the event of non-payment of small communities.
Gabriela Chang, co-founder of EthicHub, said that the activation of the Fund is a “very exciting!” because “the time has come to release the incredible work of our team, putting the design of our impact token to the test. We knew that at some point the first defaults would arrive and we are ready to face them and show that with a good design in which the token captures trust, the good to do of the vast majority of farmers actually outweighs the default of a few”.
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