Clicky

  • Welcome to P2P Lending / NFT Lending Forum.
 

ETH.LOAN

News:

This was the original Lend Academy peer-to-peer lending forum, since forensically restored by deBanked and now reintroduced to eth.loan.

To restore access to your user account, email [email protected]. We apologize for errors you may experience during the recovery.

Main Menu
NEW LOANS:   | 804.eth 2.500 Ξ | remoraid.eth 0.299 Ξ | remoraid.eth 0.299 Ξ | ALL

Do I have this right?

Started by Peter, August 31, 2013, 11:00:00 PM

Previous topic - Next topic

Dennis

I know this has been talked about on these boards at length, but do I have it right:

- notes at LC are issued en masse 4 times a day.
- the second (and I mean the absolute second) those notes appear on the platform, large institution/s with endless amounts of cash immediately suck most of them into their LC cache for review, temporarily locking them out to most small investors (the peer investors).
- then, after a relaxed review of those notes, the undesirable ones get tossed back onto the platform again, but often into the clutches of yet another institutional player - and the notes quickly disappear again.
- this process, where notes get pitched back and forth, gets repeated over and over again (in what seems like milliseconds), until they finally get fully funded.
- the small investor (the peer investor) must be quick and/or lucky to get one maybe two notes a session unless he/she is not picky on note quality.
- so the small investor (the true peer investor) who generally has limited amounts of cash, and maybe limited software capability, has very little or no chance of competing with all this.
- the small investor then is at the mercy of the big investor/s for notes, or for leftovers deemed too risky by the big guys to invest in.
- so the small investor (the true "peer" investor) starves while the big guys feast.
- P2P lending then is now mostly institutional lending, and we seem to have come full circle again in the finance community, where the big guys call the shots.  Nice concept, P2P - if it only worked.......

Now I know what I just wrote isn't always true or always happens, but I'm speaking in general terms where those things happen a lot or most of the time.

Did I get it right?

 

brycemason

As things stand today, this is more or less correct. I am less sure about a few points:

* I have no evidence that the large loan fractions which get tossed back are immediately carted by another large investor, but it could be possible that their software is scouring well past the load time.

* There is little evidence that the institutional investors are being intelligent in their selectivity. It would take an analysis comparing the fill time vs. an independent credit model score (such as Rev's IR04 or my PMax) to see if there is any correlation. Fill time is difficult to measure, although some on this board have made some attempts. If LC set their rates absolutely perfectly such that the expected returns across any loan grade were precisely equal, then the speed game would be pointless. You could invest in As and get the same return as investing in Fs. Unfortunately, I think there are legal / structural reasons why they can't use certain factors in their approval process and rate setting.

standby

I was going to say the exact same thing today - we have come full circle.  It can no longer be called peer-to-peer legitimately.  I think the big boys like to refer to it as micro lending.  I suppose that's because they were getting their foot in the door.  I've been here since just April and unfortunately, this looks like what it has become.  Why didn't they just go institutional in the first place I wonder?  Anyway, I don't know the exact details but it looks like you got the gist of it.






TravelingPennies

Bots will work overtime if need be.






Rob L

Very interesting thread. I don't understand why a large investor would find it advantageous to lock up notes in a cart only to throw many back a short time later. Does this imply a human analyst in the middle? Why would their model / buy time be slower than Bryce's who said he often gets the first note?

NEW LOANS:   | 804.eth 2.500 Ξ | remoraid.eth 0.299 Ξ | remoraid.eth 0.299 Ξ | ALL