DAOifying an IRL Financial Company

Written by
Humberto Besso-Oberto Huerta
Published on
February 20, 2024


RnDAO got a grant for supporting a group of 6 entrepreneurs to develop a solution following a scientific approach. As one of those six, this research studies the financial decentralization of a real and operational micro-credit company named BienVivir.

As a traditional financial company, the money it operates comes from a small group of holders. These holders share the entire profit and make all decisions. This research holds the special opportunity to turn a high profitable company into a DAO. This could be a great example of the power that web3 has on transitioning our economy, politics, and culture.

For this study, a DAO is segmented in: Governance, Operations, and Finance. However, due to time restrictions, this RnDAO research focuses only on the Finance segment. The goal of this research project is to decentralize the loan offering of micro-credits for local businesses. The constructive research approach followed in this study will shed light into ways for accelerating the adoption of DeFi within local economies even if the research fails to validate its hypothesis. The study is done in an open knowledge fashion and following a scientific method so others can replicate the study and cover the missing DAO sections.


  1. TL;DR
  2. Context
  3. Methodology
  4. My Original Problem Statement
  5. A better problem statement
  6. A new problem statement?
  7. Next steps


BienVivir is a traditional micro-credit company operating in México. This company offers credits that go from $125 to $2,500 USD to micro business owners. The credits are repaid in short cycles that range from six to eighteen weeks. The company is highly profitable as it operates in a high risk niche that is neglected by both traditional banks and neobanks. The customers are self-employed micro business owners operating at the local level, most of the commercial niches of the customers include corner shops, butcher shops, hardware shops, typical meal preparation shops, clothes shops, and some others are taxi drivers.

All credit offered is for production, maintenance, or selling and not for personal credit.

Most of the customers of BienVivir use the credits for three reasons: buying inventory at a lower price than what they are capable of buying with their current cash flow, buying equipment, and paying services like rent, taxes, permissions, utilities, or remodeling their shops.

When customers of BienVivir do not pay back on time it is mainly because they got sick or they had a personal emergency that made them temporarily close their shops or if not closed, their cash resources went to cover those emergencies.

Micro business owners are characterized to be fragile regarding health issues, extorsions from the mafia and government supervisors, inflation, and climate phenomena. In summary, they do not count with any safety net and are constantly affected by third parties profiting from them.

Looking at this context, BienVivir decided to carry on an “Exit to Community”, meaning that profits, decision-making, and power are to be held by its workers, customers, and investors.

BienVivir aims to marry the concepts of exit to community with the power of the blockchain technology to have a transparent, automated, and decentralized company that can support micro business owners and workers to gain freedom by possessing the means of production and collectivizing their decision-making.

It is to be noted that the company has already achieved a pilot program of 10 clients that have gone through the process of getting a credit and repaying it completely in crypto.


The constructive research approach will lead the research and development of this solution. This approach is ideal for solving real-world problems by building an artifact that can validate if the proposed solution truly resolves the stated problem, bringing about significant practical and theoretical implications. This research approach guarantees that even in situations where the practical implementation may fail, the research can still contribute meaningfully to theory (Lukka, 2003).

This study will follow a semi-structured interview as the qualitative research method to use. Semi-structured interviews allow the interviewer to have a pre-defined set of open questions to which prompt the discussion and explore particular themes or responses as needed (KnowFife, 2018)

Original Problem Statement

“I am a micro business owner [a unique person with my context],

I am trying to get a credit to buy inventory [accomplish an important goal],

but the credit amount I get is not enough to buy at lower prices to make my prices more competitive [I have this problem],

because what I can individually buy will never match what a group can [root cause],

which make me feel overwhelmed and without possibilities to compete with the big shops [emotional effect].”

The people interviewed for this first problem statement

Business owners of corner shops (2), butcher shop (1), clothing shop (1).

Riskiest assumptions

Thinking that people would like to coordinate to outcompete big shops (corporations).

Thinking that getting a lower price was the ultimate factor for decision making.

Thinking that people would make inventory decisions based on data.

The insights

Business owners like their freedom of deciding alone. They see coordination as a pain where they can lose more (time, nerves, and product quality) than gain any benefit, even if it could be a better price.

Business owners make decisions based on what they see and feel people buy the most, but there’s no registry of sales.

Product distributors have enclosed small shops with a code bar system where they need to buy using it, so trying to a crowd buy their inventory would require to also implement a new distribution system.

Feedback from the mentors and the cohort fellows

Solving the inventory problem is a completely different business that enabling credit for crowd-buying it.

Solving the inventory problem does not add value to the current borrowing customers.

Problem statement is invalidated and needs reformulation.

A better problem statement

After two weeks of considering the main research problem and a pause to attend a hackathon, the research took a new direction, this time was clear that for collaboration to exist it requires to understand the parties involved. This study is part of a collaboration tech program, thus researching how to enable the decentralization of credit lending and borrowing requires to study the two sides of this market: The loaner, and the borrower.

Borrower’s Problem Statement

I am a Mexican micro business owner living in Monterrey [a unique person with my context],

I am trying to get a credit for my business [accomplish an important goal].

My reputation here in my community doesn’t help me get credits from a wider set of lenders [I have this problem],

because my credit history is kept in silos and thus, my “real world” trustworthiness doesn’t reach the wider set of lenders available at the digital space [root cause].

This makes me feel overwhelmed by the interest rates and without any real options, [emotional effect].

Research Survey ran via: semi-structured interviews to micro business owners directly at their shops.

Questions asked and who participated

The following set of questions were asked to 6 micro business owners, 3 in Monterrey and 3 in Querétaro, México.

  • Would you be so kind as to describe me, what would your business look like if you had all the money available for doing so?
  • What things help you get a credit right now?
  • If you ask for several credits to different lenders, why do you do that?
  • What would you need to get that whole amount from one single lender?
  • What are your risks?
  • If you had the chance to get a bigger credit line by offering guarantees, what would these be?
  • For how many months or years have you asked credits?
  • What happens when a loan provider doesn’t offer you anymore credit?
  • What’s the effect of starting with a new loan provider?
  • What are the obstacles that traditional banking puts you in order to get a credit from them?
  • If there were no barriers, what things would you consider to be trust worthy for identifying if a person will pay you back even when it’s the first time they ask to you?
  • If you had a trust score, what things should this score measure?
  • If you were the owner of the bank, how would you like your customer to feel about you?

Lessons from the borrowing side:

Business owners were taken by surprise. Three out of six said that no one has ever come to them asking these type of questions, no one has ever taken care of looking for ways to help them. Credit providers only come for the money.

Others said that crypto is a fraud, they’ve seen in on the news (TV and social media). However, they recognized (after talking to them) that it’s the future.

Credits of $3K or $4K MXN pesos (~125 to 160 USD) are not enough to make an investment within the business. However, those are the amounts the business owners receive from the loaners, due to a low trust and the lack of a credit score. So, what people do is take four or more credits from different providers.

People answered that they will gladly take one single loan provider if this could offer the credit amount they need with a lower interest rate. However, some others answered that if someone offered them a large credit they will still get small credits. This is an alert of a lack of financial education and or a willingness of failing to pay to the credit providers.

An idea that came to the team when analyzing the answers was to gradually unlock larger amounts not only via their credit history but also when they complete other requirements such as certificates on financial education.

Key questions to determine what would be the ideal trust score were:

What things would they consider the most trustworthy for giving a loan to their clients? The answers were the same across the interviewees: “That they have a house were I can go look for them”, and that “they are owners of a business with several years running”.

Besides those answers, others that repeated were: “Paying on time” and “direct communication when something happened and they are unable to pay at the agreed term”

What happens if the provider doesn’t offer anymore a line of credit? “Wait until someone else comes offering it”

What is the effect on starting with a new credit provider? “Small credits, high interest rate.”

What is the main obstacle when asking a credit to a bank? Three answers were given: Not having a credit score with them, not having all the papers they ask, requiring to go and lose time at the bank’s place.

What would they offer as a guarantee? All of them answered the same: to not offer anything as a guarantee. All of them reported that they don’t have many assets and they were not going to put them in risk, knowing that they can fail to pay in the agreed terms.

What things help them get a credit? Having brick and mortar business. That’s their most valuable asset and the reason why they receive credit offerings.

Finally, they all reported that they are completely unhappy with the ways they are being asked to pay. The mafia comes yelling and banging the door, frightening their clients. They are comfortable with the ways BienVivir asks for the money because they can discuss ways to solve issues, even if they need to pay more, but their clients are not frightened.

Lender’s Problem Statement

I am a holder of cryptocurrencies looking for high yield options within DeFi/ReFi [a unique person with my context].

I am trying to increase the economic capital I hold while doing something innovative and interesting to talk about [accomplish an important goal],

There are many scams within crypto. I don’t know who or what to trust, even if they are smart contracts [I have this problem].

There’s no easy way to find if an investment opportunity is legit and will genuinely provide the high yield I’m looking for [root cause],

which makes me feel overwhelmed by the number of available options, and the different metrics and learning curves I need to go through to decide if to invest or not [emotional effect].

Survey ran via: https://tally.so/r/wMzDM8

Questions asked and who participated

The following set of questions were shared within several groups of people experienced with DeFi protocols. By the time this blogpost was written six people answered. Later three more added their answers, however, they remained fairly similar. Finally it is to be noted that after making the survey the interviewees were invited to a Twitter Space where to further discuss the results.

The questions asked in the survey were:

  • What would it take for you to lend $125 - $500 USD in crypto to a local business that just opened their wallet (no web3 transaction-based history)?
  • What non-negotiable thing will stop you from lending web3 credits to local businesses?
  • List three kinds of Real World Assets (RWA) that would be enough for you to trust that a person with an active business will pay you back?
  • How much trust points would you give to the RWA #1 you listed before
  • How much trust points would you give to the RWA #2 you listed before
  • How much trust points would you give to the RWA #3 you listed before?
  • What interest rate would you give to the person if she has all the RWA you listed?
  • What interest rate would you give to the person if she has only half of the RWA you listed?
  • What interest rate would you give to the person if she pays back and thus starts to build a web3-based transaction history?
  • Would you like to test this Decentralized Credit Score? If so, how much would you loan to an IRL business?
  • Would you prefer lending to a single business or to a group of businesses?
  • Please explain if there would be any difference for you that a new wallet has digital but non-web3 credit based assets registered, for example that wallet having Attestations (POAP/EAS)and a 5 point Gitcoin Passport, among other existing and easy to proof options.

Lessons learned from the lender side:

According to the interviewees, trusting a stranger on internet with a loan for her business is possible if the following criteria is met:

  • An easy way of doing it, i.e., a website that makes it easy to understand what are the agreements (yield, maturity, etc).
  • A trusted party that vouches for that business, someone on the ground that can enforce responsibility.
  • A web of trust that recommends lending through that site and to that business.

Some other interesting answers about what would encourage people to lend, were:

  • Info of the activity of that business, like what products or services they sell, what’s their rating, what do their customers say about them, if they have a base of fans or supporters, what’s their cashflow, their story, or why would they deserve that credit.
  • Some kind of collateral.
  • A clear model where the person builds out a “crypto-credit” score for future and more trusted lending.

The only reasons why the interviewees won’t give any credit at all were:

  • climate-negative business.
  • illegal business.
  • not being able to speak to someone at the other side of the platform
  • not being transparent.
  • lack of payment insurance.

Interviewees were asked what real world assets could be brought to a trust score so to ease lending without meeting the person. The answers were:

  • A business plan, history of doing well in their business, a demo of what they offer products/services.
  • A way to know this person has real community relationships and roots like friends, family, and loyal customers (an existing web of trust).
  • Proof of ownership of assets such as a house, land, a car, or a bike.
  • A voucher from a trusted source.
  • Proof of buying what they said they’ll buy (for example the bills of the inventory, utilities, etc)
  • Proof of cashflows

Interviewees said they would charge differently depending on the trust score of the borrower, the lending offers range from 2% to 15% per loan. And when the person holds also a crypto-based trust score they would drop their interest rate. This last offer ranges from 4% to 7%.

When asked if they would like to participate, and how much would they offer as a loan, four interviewees said $100 USD and one said $500 USD.

When asked if they would prefer lending to a group of businesses or to an individual business, 4 out of 6 said that individual business. This was surprising as one could expect to lower the risks by distributing these into a portfolio.

The interviewees were asked if adding digital attestations such as Gitcoin Passport and POAPs to the trust score would make any difference to their decision. The answer was half saying yes, that would be very helpful, in fact reducing the interest rate offered and that it would implicitly demonstrate that these people are on their journey to onchain transparency.

The other half said that this won’t make any difference to them.

Lessons learned about the problem

Problems might have two or more sides. Researching only one might lead to fake assumptions. It is important to understand all the parts involved.

The web of trust is a hard problem with many niches of applicability. Coordination tech is needed to enable wide access to cheaper credits for markets in development. Coordination tech on this problem requires a solution that is part digital and part on-the-ground. The on-the-ground part requires two entities:

  • The borrowing person to fill out their trusted score, and
  • A trusted source to validate the proofs summited by the borrowing person,

On the digital part, there’s a need to show a genuine willingness to onboard people into decentralized finance, so basic stamps such as a low level in Gitcoin Passport would suffice to provide that kind of trust.

It is important to highlight that the trust score requires certain locks that make sure the borrowing person has the financial awareness or education to take a larger credit -this with the intention to avoid risks for those lending.

On the borrowing side, it is relevant to say that there are people interested in lending to strangers, and what they need for doing so is mainly having a support mechanism to not lose their money, that lending is easy and the agreed terms are clear to understand.

The interviewees highlighted that they want to know who or what type of activities they support. This talks about an important feature of transparency that banks are not providing, which could be a strong feature to remark when talking about the power of DeFi.

Finally, something relevant within the Twitter Space was the coming up with a potential prototype that could be what this research will focus on the next weeks.

A new problem statement?

A new problem statement should be formulated, this time one that can put to test the current insights with a prototype and a process that applies to each of the sides of the market (borrowers and lenders).

There are several questions that the researcher still has, and will surely clarify them in the following coaching and swarming sessions of RnDAO. Some of these questions are:

How would a solution for the borrower look like? in a way to digitalize the current trust worthiness of each person/business.

How would a solution for the lender look like? in a way that enables them to trust in lending to a stranger.

What kind of delegated collateral solutions could be applied (EthicHub & Aave)? Would a lender give credit only to those with collateral or would they also lend to people with a trust score? or would they need both?

Did it change the root cause?

The root cause of DAOifing the financial company has been three things:

  1. Lowering interest rates to local businesses in México and LatAm,
  2. Sharing ownership of the means of production by all the stakeholders that form part of it (workers, clients, investors),
  3. Learning and exploring the potential of blockchain technology to distribute power and capital.

The root cause stayed the same. Stay tuned!

Next steps

There’s an Arbitrum Gitcoin Round opening next week exclusively for LatAm builders. It could be a great way to get people to collaborate in developing a functional prototype out of this research.

Expect more posts regarding the delivery of the second milestone. Meanwhile, check the other fellows’ work. You might find some interesting opportunities to collaborate or fund ;)