Wins, Challenges and What's Next: Insights from a Reputation-based Stablecoin Credit Pilot

Highlights from Twitter Spaces session with Haraka, Mento Labs, Kotani Pay, and Clixpesa

Catarina: Hi everyone! I'm Catarina from the Haraka team, working in operations. We're super excited to come back for our second Twitter space and share with you the results, learnings, and what's next for this groundbreaking pilot.

Over the past few months, we've been working hand-in-hand with our amazing partners - Mento Labs, Kotani Pay, and Clixpesa - to run a pilot that aims to improve financial access for micro-entrepreneurs in Kenya.

Our focus? Testing reputation-based credit systems and leveraging on-chain data with the Mento’s decentralized local currency stablecoin, cKES (Kenya Shilling). It's been an incredible journey, and we can't wait to dive into the details with you all!

Will: Hey there! Will here, CEO and co-founder of Haraka. Let me start with the "why" behind our project. You see, in many emerging markets, people rely on informal savings circles or "chamas," as they're called in Kenya, to fill the gap left by traditional financial systems.

At the same time, we're seeing a boom in stablecoin adoption, especially in places with significant financial frictions. We believe that by building on top of this emerging technology, we can create financial applications that truly serve people's needs. But to do that, we have to start with the user. That's the whole genesis of our pilot.

We wanted to test a few things:

Can we give folks access to web-based solutions and stablecoins, especially those who might be unfamiliar with crypto?

Is there a viable opportunity to leverage community-based knowledge for better credit decisions?

The results? They were fascinating! We saw strong alignment between people thought to be good borrowers and those who actually repaid their loans. It's all about unlocking that local knowledge and aligning incentives.

Markus: Hello everyone! Markus here from Mento Labs. We're the folks building Mento together with a growing community, the decentralized stablecoin platform for launching and operating customized stablecoins on the Celo blockchain. The Kenya Shilling stablecoin (cKES) used in this pilot is built on the Mento Platform.

Being on the ground in Kenya and seeing how p2p finance works firsthand was an amazing experience. It really shaped our thinking about stablecoins and their use cases going forward.

Here's what we learned:

There's a real demand for local digital currencies, especially to make capital, i.e. credit more accessible.

Stablecoins can significantly slash costs for cross-border payments and remittances.

Local currency stablecoins help borrowers, e.g. SMEs, avoid FX risk when their income is in local currency.

We're not stopping there, though. We're working hard on improving the user experience and reducing high transaction fees to make stablecoins more accessible for smaller transactions.

Imagine being able to send just a few dollars worth of local currency quickly and cheaply - that's the future we're building towards!

Derrick: Hi everyone, Derrick here from Clixpesa. We were the ones providing that simplified, intuitive wallet for users to manage their "Chamas."

Our big focus? Making sure users could easily create and manage their groups, save, and access loans through Haraka's dApp. Let me tell you, we learned a lot! Here are some of the challenges we faced:

Onboarding users who weren't tech-savvy and were new to crypto

Simplifying key management and wallet security - it's crucial, but can be confusing for first-timers

Educating users about on-ramping and off-ramping fees - always a tricky conversation!

We tackled these by really focusing on user education and simplifying our interface. We even sponsored gas fees during the pilot to make it easier for users. It's all about making the tech invisible and focusing on the benefits for the user.

Abigail: Hey there! Abigail from Kotani Pay here. We were the bridge between the crypto world and local payment channels like mobile money. It was exciting to be part of making this all work seamlessly for the end-user.

We did face some challenges:

We had some service downtime issues - we're upgrading our API to address this

Navigating the regulatory landscape for crypto in Kenya is tricky - we're a compliance-first company, so this is super important to us

But you know what? Despite these challenges, the pilot was a success.

It was amazing to see how users could borrow, receive, and repay money as easily as using any other credit facility. That's the power of collaboration and focusing on user experience!

Catarina: What's next? We're looking at expanding to more communities, improving our tech, and exploring new use cases like FX hedging and more efficient remittances.

The future of finance in emerging markets is bright, and we're thrilled to be at the forefront of this revolution!

Thank you all for tuning in and being part of this journey with us. Together, we're reimagining finance for the next billion users!

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