Takaturn mini DAOs

How does Takaturn overcome the challenges faced by traditional co-operative loan schemes?

Takaturn are mini DAOs that are created for a defined period of time to fund a cooperative loan. Participants of the DAO pay a predetermined amount into the DAO contract on a regular basis (weekly or monthly) and take turns to receive the entirety of the DAO fund (the “money pot”). Each participant puts up collateral to create a trustless system. At the end of the DAO term, everyone will have been the beneficiary once and all collateral will be returned.

The genesis of the Takaturn mini DAOs on the blockchain stems from a desire to overcome the challenges of traditional co-operative loan schemes.

To eliminate the trust and default risk issue and to create a trustless system, Takaturn requires participants to contribute to a “collateral vault” as a condition of participation. The collateral amount is held until all payments have been made. Such a system allows participants to borrow against their collateral and is particularly attractive to participants who do not wish to sell their collateral, but who nonetheless want to use their collateral to fund spending. Compare it to holding gold in the real world. You can either sell your gold to fund spending, or use your gold as collateral and borrow against it to fund spending. Those with a bullish view of the gold price will prefer to use their asset as collateral and borrow against it anticipating that the gold price will increase over time.

Creating a trustless system enables Takaturn mini DAOs to scale in value, giving participants access to larger loans. A trustless system enables a peer to peer co-operative loan marketplace on a global scale.

In addition, leveraging the power of smart contracts, the management of funds is now fully automated and managed by the smart contracts, eliminating costs and the potential for human errors.

We acknowledge that a collateralised system presents hurdles to some of our demographic

In the real world, the people who most often engage in cooperative loans don’t usually have collateral to put down. Why would someone need a loan if that money was already available to him? In truth, Takaturn is not servicing the segment of society that is the most vulnerable. What we are doing is introducing an old system of cooperative loans to a demographic who are seeking to leverage their crypto assets (that they do not wish to sell) to get liquidity and a demographic that would usually use institutional lending entities, eg. banks for credit loan facilities. This demographic uses Takaturn to participate in a shariah-compliant savings program that helps themselves and helps others.

That said, Takaturn provides a goal for the most vulnerable to aspire to, by promoting a mindset that both encourages savings and crypto asset adoption, which we believe in the long term will break the cycle of poverty that the most financially vulnerable find themselves in. The Takaturn concept encourages people to participate in interest free lending and borrowing, grow their wealth (crypto investing has low thresholds for investing, generally) and empower their progeny in the principles of money management.

Takaturn mini DAOs are a market disruptor in the banking segment of lending and borrowing and it promotes a savings mindset.

Increasingly, people are holding crypto assets like bitcoin and ether as stores of value and long term investments that they hope will appreciate in value. Takaturn collects collateral in Ethereum (ETH) and allows participants to borrow against this collateral in the stable coin USD Circle (USDC).

This arrangement allows participants to hold on to their appreciating assets, rather than liquidating them to meet an expense, by enabling them to borrow against these assets through Takaturn.