The DeFi "Loan" Problem
We believe that most of what we're seeing in DeFi isn't actually "lending", at least not in a practical sense.
When the average Joe or Jane seeks a loan, they do so because they want to make a purchase that they don't have enough money for.
When the blockchain Bob or Alice seeks a loan, they do so because they want to use assets they already have to get more money.
Don't get us wrong. This structure is useful, but perhaps only to a small few. In this design, the DeFi loan is an incredibly useful leveraging tool for traders. Bird is introducing a new design: one that we hope will solve a wider range of problems for a broader swath of people.
DeFi Loans solve a small problem for the few; Bird loans will solve a bigger problem for many.
In the ancient times before the dawn of DeFi (also known as 2018), lenders competed with one another by offering loans that were custom-built for each borrower. Understanding why is pretty simple if we tell you a simple story. Jane is smart with her money. She opens her mail right away, pays all of her bills on time and never overdraws her bank accounts. If Jane asks you to borrow $5 and promises to pay you back $6, would you do it? Joe is less smart with his money. He only opens offers for new credit cards, doesn't know how to write a check, and hasn't had a job in years. If Joe asks you to borrow $5 and promises to pay you back $6, would you do it?
If you're more like Jane than like Joe, your answers are probably: yes and heck no, respectively. That's because Jane's financial responsibility creates trust, while Joe's, well it does something else.
The Bird team believes that both Jane and Joe should have access to DeFi loans. But, we also believe that Jane should be rewarded with a better loan offer than Joe would receive.
This is the Bird vision in a nutshell, or rather, an eggshell