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How Good is Your Karma, Coin?

With less than two days remaining to the massive Coindelta Karma (KRM) trading competition, one must wonder what are they really going to do with their winnings.

The winnings this time is going to be in form of Karma-KRM coins. But you must know that there are only three known exchanges in the world trading KRM coins. One is Coindelta. Other two are decentralised exchanges RuDex and OpenLedger.

100 people will win KRM tokens on Coindelta and if all of them decided to sell the coins on Coindelta, the prices are going to fall badly. Are there any other ways? What else can you do with Karma? Before we answer that, we must begin, at the beginning.

What is Karma?

Karma is a P2P lending platform (I know the last post was about lending too). We have spoken of lending platforms like EthLend and NuoLend in the past. But Karma is different. Karma literally relies on good karma for its platform.

Karma is a new blockchain, a system that allows you to borrow or fund capital, anywhere in the world. Using Karma, you can place a request for loan with your chosen interest rate, duration, collateral and currency. It is not decentralised.

Karma is meant for individuals and small businesses to borrow fiat capital/funding for themselves.

Unlike other apps, on Karma you are actually bound by a legal contract and have to complete KYC with phone number before you receive the loan.

How it Works?

You have to create an account on Karma and enter your profile details like name, location, kind of business, etc. The more information you provide, the more are your chances of getting funded because the lender will look for trustable details.

After creating the account you can create an ‘ask’ for the loan amount that you need. At this moment on the Karma’s alpha Dapp there are a few asks. You have to enter your chosen interest rate, duration and collateral if any.

After that, someone, from somewhere, will fund the loan. You will have to complete KYC and sign an electronic contract for the loan. Truly Peer to Peer, but not decentralised. Your rating will be updated as you make repayments as a borrower. Better the rating, more chances to secure a funding.

creating a loan on karma platform
Karma’s current list of loan requests

The Risks

Unlike the other decentralised lending platforms we have tested, applying for a loan on Karma doesn’t require collateral. As you can see in the above screen, many of the loans are collateral-free.

You as a borrower or lender have to abide by a legal contract that mandates you to pay on time. But at this point, if the borrower decides to run away, it will be a long chase.

As I said before, Karma can only function well, if the karma of the users is clean.

Eventually Karma will have market agents on the platform such as local market experts, validators, insurance agents, etc. These people will help decide the ratings of a loan seeker and based on their rating, the lender can decided whether or not to fund the loan. The one pager shows that Karma will automatically initiate claim filing (if you have insurance on your funding), apply for a class action law suit, and the local debt collectors will try to secure your collection as well.

Karma is hoping to clean the platform on the free and open market logic, that eventually the bad players will be out of system because only the trusted users will have a better score. Everyone gets a rating, from agents to debt collectors, from guarantors to promoters. Better ratings mean higher security, kind of like credit score.

Karma is a highly ambitious project that launched the ICO in November of 2017 has hardly managed to gain any traction, until now.

CoinDelta Listing

Coindelta listed Karma (KRM) coins on June 12, 2018. Remember the ICO was over in November 2017 and until now only two decentralised exchanges have listed KRM.

The trade volumes on Openledger and Rudex are about $35000 combined but coindelta is pulling in several times that volume. Why? Because of a trading competition.

Currently over a 100 traders on Coindelta are trading KRM in hopes of winning the trade competition. But what happens when the competition is over? What will you do with all that Karma, the one you bought and the one you won?

Two words, Dump It. The traders will be moving their capital to another trading competition so they will want to liquidate KRM coins. If they do it on Coindelta, the prices will go down unless ofcourse people really believe KRM coins are of good use and are dying to buy back. The later looks quite difficult.

KRM karma coins on open ledger
Karma Coin trading with BitUSD pair on open Ledger

Can we use Karma?

Between the time I started writing this article and until now, the KRM prices on Coindelta has gone down from Rs. 0.67 to Rs. 0.63.

The question we must ask should be, is there a real world use of KRM? Most cryptocurrencies today do not have a real world use, but there are atleast a few exchanges and the demand for it that keeps the price stable.

For KRM however, with just 2 decentralised exchange and coindelta, the price cannot remain stable by exchanges. People need to buy it to keep it from falling badly. Why would people buy it? There seems to be no use of it, as of now.

But eventually there may be some benefits. If you hold 100k or more KRM coins, you get access to investment and loan opportunities ahead of others. Using KRM tokens you receive 50% discount on their platform. If you are top 15 holders, you get voting rights.

So, big bag holders are getting special treatments. Either way, these things are in the white paper and that seems to be only use case of KRM as of now.

Overall, Karma can be a promising project with more adoption but at this stage it is way to early and risky. At the time of this writing Coindelta holds 1.2 Crore KRM tokens which are roughly valued at 118k USD which is four times the current volume of other exchanges.

It remains to see what shall be the fate of this P2P lending platform.

While it is tempting to participate in all the trading competitions, sometimes you need to choose your battles wisely. What do you think? Let us know in the comments below.

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