Zivoe is new Real-World Asset protocol created to disrupt the predatory lending market. By pooling capital on-chain and lending it to consumers who’ve been the victim of high-interest loans, Zivoe aims to make credit more accessible and affordable to consumers around the globe.
Last week, I caught up with one of the co-founders of Zivoe, Kristal Gruevski, to talk about the company’s plans, the predatory lending landscape in the U.S., and what the blockchain can do to help fix it. Here it is.
The following article has been edited for concision and clarity.
To get started, can you please tell me about the origin of Zivoe? How was the idea born?
My family’s from Macedonia. In the Balkans, Zivoe means “to life.” So really, what Zivoe is meant to do is give people financial capabilities, financial health, and financial wealth for life.
I previously worked for a high-interest lender along with one of our other founders, and we realized that at least half of the consumers in this high-interest predatory lending market don’t deserve to be in a high-interest loan. That comes to almost 10 to 15 million Americans in the U.S. And I’m talking about Zivoe from a U.S. credit perspective first, but really Zivoe is a global project. We just happen to be partnered first in the U.S. with a regulated consumer lender.
But basically, imagine taking someone from a 300% APR interest loan and slashing their monthly payments down, and helping the consumers who need it the most. It’s a huge passion project for us to be able to help millions of people globally, and so that’s where the idea came from.
What we thought was that there’s no better way to do this than by using the blockchain to give people access to an underlying RWA asset class that they normally wouldn’t have access to on-chain.
Okay, and how exactly does it work?
So, there’s a Senior and Junior Tranche, and you deposit stablecoins into either Tranche depending on what you’re trying to achieve. From there the stablecoins are lent to our regulated consumer lender.
So, it’s a B to C model right now. And then the stable goes to the regulated lender. For example, it’s Inclusiv in the United States. Inclusiv then converts the stables into fiat, then they lend the money to the consumers. We’re then bringing the yield from the consumers from the repayment of the loans back on-chain, and it’s disseminated accordingly to an “algo” for users that are in the protocol.
How does Zivoe determine who the regulated lenders are?
For us, there is a shared management team. The vision of Zivoe was to be the world’s first autonomous consumer lender using blockchain technology to be able to go ‘direct to consumer.’
However, due to regulatory unclarity and uncertainty, we thought it was best to protect the protocol and the users from any type of risk. So, there’s a global protocol and then the lender is regulated in the U.S. and can legally and compliantly lend to the consumers.
Hopefully, we can go DTC (direct to consumer) in jurisdictions such as the UK and EU area, but due to certain regulatory waters we’re trying to make sure that we’re doing the correct thing and the compliant thing. So for now, it’s our management team that effectively is deciding on the credit risk.
How do the regulated lenders go about identifying people who have been victimized by high interest loans?
From our experience working at for high interest lenders, we already understand the underlying asset class. We have over 50 years of collective experience as a team in legal risks and fintech operations.
So, we’re looking at partnering with major credit bureaus that have the relevant available information, and we also look at bank data. So the goal is to take a specific niche consumer and help them have better financial health and well-being.
Okay, let’s talk a little bit about predatory loans in general. I’m curious what qualities or interest rates make a loan “predatory.” And from a U.S. perspective, what consumers are most affected by these loans?
It’s mostly people who are underserved and underbanked. One out of four people in the U.S. can’t afford a thousand-dollar emergency, and these are the people who are impacted the most.
It’s a bad thing because it traps consumers in something called a “cycle of debt,” and it doesn’t give them a chance to improve their financial well-being or credit. And think about it, why wouldn’t companies give consumers better options even though they can? It’s because they’re making too much money…
In the U.S. alone, we’re talking about numbers (interest rates) that go from a hundred percent all the way up to a thousand percent. So, we’re excited for this market opportunity to help these consumers. Think about taking someone from a 500% APR into something that is so much more consumer friendly — like taking their payment and slashing it in half.
And our mission is to continuously help the consumer have better financial well-being and better credit health.
Great. I wonder if Zivoe is considering working with any other sectors of the debt economy. Like student loans, for example?
Yeah, we’re always interested in looking at other sectors, but we don’t want to put the cart in front of the horse. What we know is consumer loans at high-interest rates. We want to tackle that first. But we are also looking at automotive lending, and we would look at student loans and possibly mortgage down the road.
We’re also looking at credit builder products. For example, say you start making a $300 monthly payment, and then we take it down to $150 for you. Now you have an extra $150 worth of free cash flow every month. That’s amazing. Especially during economic downturns. That’s like a hedge against inflation.
But what do you do with that $150? Do you want to take your kid to a movie or for ice cream? Or maybe we could start looking at a savings accounts for you, and then trying to help you achieve a better state of financial health and well-being.
Thank you.
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