Proposal: SphereDAO [Rapid Grant]

Mission Statement: To bring credit to everyone by 2025.

Much of the value being created in decentralized finance is focused on investment offerings that maximize investor returns. This means that only those who have crypto-assets are able to benefit from the developing decentralized financial system. It’s a sad state of affairs because decentralized finance has the opportunity to be the most inclusive financial system yet. By focusing only on investment yield and not on the infrastructure needed to lend crypto to fund new communities, businesses, etc. many people (especially those in emerging countries) are left out. Much of the United States relies on credit. In fact, it’s become a staple for those who want to receive an advanced education. Without innovation that enables credit in crypto at a global scale, we’re missing out on the chance to deliver credit to those that need it most.

Why don’t people just leverage the traditional credit system to make crypto purchases?

  • From an ethical standpoint, the existing credit system is heavily biased. Especially for personal loans. Many creditors who provide personal loans take into account ethnicity, education, etc.
  • From a technology perspective, the credit system as it exists today isn’t suited to facilitate financial transactions on the blockchain because the infrastructure isn’t compatible.
  • From an economic perspective, solutions that bridge credit cards for crypto-based transactions incorporate a significant annual percentage rate that starts at thirty percent.

SphereDAO is a platform that enables communities to provide credit in crypto to their members. Communities that join the platform operate as community funds and onboard their members. Since the platform is peer-to-peer, communities can source liquidity from external investors, from members, or from their own treasury. Lenders that deposit to a fund receive a specified interest rate. The community can leverage the platform to enforce a variety of user validation rules to map the identity of the user to their wallet. For some this includes KYC with a government ID, but for others this could mean non-KYC with a NFT or public token. The community has the flexibility to determine the loan terms and conditions as well as the public tokens accepted. A delegate (i.e. money manager) is selected by the community to manage the liquidity of the fund. He or she approves or denies requests from community members for credit-based loans. Both the community and the delegate are incentivized to participate as the platform allocates them a percentage of the loans transacted within the fund. Borrowers must meet the specified criteria required to join a community fund. Upon being approved to join a community fund, the user is prompted to link additional wallets and an AI-based credit underwriting algorithm developed by Spectral determines their Web3 credit score. The user can borrow up to their credit limits against community funds for which they are members of. For a more extensive summary of the SphereDAO platform please refer to the whitepaper on our website.

How is it unique and differentiated? Why is it better?
The SphereDAO platform is the first of its kind and the best suited to bring credit to crypto. It is better, faster, and cheaper than traditional credit-based lending options. It is better because it organizes your community as your lending institution and you are more likely to be approved. It is faster because much of the loan approval process can be driven by the AI credit scoring model and requires little to no intervention from the delegate. It is cheaper because your community is more likely to give you better interest rates.

What guardrails are set up to help community funds be successful?
SphereDAO strongly believes that credit is a privilege. As a platform provider that is tasked with providing credit to everyone, we employ a number of guardrails to protect both the lender and borrower. Not everyone will be automatically approved for credit. New or underqualified borrowers will be walked through a series of collateralized and undercollateralized lending options as a way to build up their wallet score and earn the ability to use credit in Web3. In this way, community funds eliminate defaults and borrowers are eased into credit-based loans.

What are the recourse options?
There are multiple recourse options. Some of these have real-world implications and others have implications for future crypto-based transactions. It largely depends on what identifying information is associated with a wallet address. If a user defaults on their loan it will impact their real-world credit score with Experian and TransUnion. This could also mean being sent to collections. On the other hand, a user defaulting would negatively impact their wallet score and would be updated downstream to all Web3 credit score subscribers (e.g. all other Web3 communities on Sphere). Potentially, the worst case scenario includes revoked governance in your communities and not being able to participate in community events.

How will we win?

  • Part 1: Provide communities with the tooling to manage the fund
  • Part 2: Tap into the advantages provided by AI-driven underwriting
  • Part 3: Support a plethora of tokens
  • Part 4: Focus on community captured value

Common Use-Cases:
There are a number of use-cases that our platform facilitates. These include buy-now-pay-later (i.e. BNPL), bridge loans, incubator programs, real-world goods and services, and non-for-profit relief. For a more complete list, please refer to the SphereDAO Whitepaper.

  1. BNPL: The Sphere lending platform allows consumers to buy NFTs.
  2. BNPL: The Sphere lending platform allows investors to buy virtual real estate.
  3. BNPL: The Sphere lending platform allows gamers to make in-game purchases.
  4. Bridge Loan: The Sphere lending platform allows users to gain liquidity while liquidity is locked in a centralized exchange or token staking model.
  5. Incubator Programs: The Sphere lending platform can be used by communities that provide credit to their members as a way to incubate new projects and ideas.
  6. Real-World Goods and Services: The Sphere lending platform allows users access to favorable terms for student loans.
  7. Non-for-profit Relief: The Sphere lending platform allows users to receive zero percent loans with flexible payment schedules from non-profit organizations.

The Business Model:
SphereDAO has a couple different revenue streams that benefits the underlying platform and it’s respective community fund partners.

  • Percentage of Loans Transacted: Communities will receive up to 2.5% of all loans that are transacted through their community fund. Sphere will receive 2% of all loans transacted across the entirety of the platform.
  • Borrower Interest Rates: Liquidity providers receive interest on deposited funds. APYs will be different based on the fund, but is a good vehicle for those looking for good yield options.

For brevity, this doesn’t include additional revenue streams such as securitized debt, establishment fees, late fees, etc. Refer to the whitepaper for more information.

The Team:
Ryan McNutt and Christopher Ries are co-founders at SphereDAO and are full-time. They have funded the business from personal savings. There are also twenty part-time project contributors.

Ryan McNutt graduated from the University of Arizona with a B.S. in Information Science. Ryan previously founded a startup (ApplyAll) that achieved 100K+ in monthly active users. He has also led global engineering teams at CBRE (leading over one hundred engineers).

Christopher Ries graduated from the University of California at Irvine with a B.S. in ICS. Christopher was the first product manager at Cylance (acquired by BlackBerry for $1.4B) and most recently managed a large portion Security Products Portfolio for Oracle Cloud Infrastructure (e.g. secrets management, data loss protection, etc.). He also holds a top secret government clearance and has experience securing and auditing government financial systems and critical infrastructure (e.g. water treatment facilities).

The Roadmap:
Q1 2022:

  • Community building on Discord, Twitter, and Telegram
  • Launch of CryptoSphere podcast on Spotify, Youtube, and Apple Music
  • Release of Genesis NFT Collection
  • Smart contracts development work

Q2 2022:

  • Strategic partnerships with DAOs and Web3 communities
  • Build data science model for wallet scoring and/or partner
  • Beta program for SphereDAO unsecured lending platform (hosted on ETH testnet)
  • Smart contract audit with third party vendors

Q3 2022:

  • Public launch of SphereDAO unsecured lending platform on Harmony/ETH mainnet
  • Credit score sharing protocol with other TradFi/DeFi platforms
  • Continued engineering efforts to minimize fraudulent usage
  • Multi-chain support with EVM compatible blockchains: Avalanche, Polygon, Binance Smart Chain, etc.

Q4 2022:

  • Decentralization of SphereDAO with off chain governance
  • Roll-out of SphereDAO credit membership program
  • Partnership with consumer debt asset buyers (Blackrock, Vanguard, etc.)

Milestones and KPIs
Within the first three months of launching we would like to hit all of the following metrics:

  1. 100+ communities
  2. $250M in total community market cap
  3. $5M in liquidity for unsecured loans
  4. $20M in transaction volume
  5. 10K in monthly active users
  6. 10K in transactions per day
  7. $1M in unsecured loans transacted in a single day

The Ask:
We are requesting 100K in $RLY tokens as an ecosystem partner to help Rally with $RLY token adoption. This grant will help us accelerate our development efforts and to help with other operational costs such smart contract audits and deploying to ETH mainnet.

How does this benefit the Rally ecosystem?
This will benefit the Rally and Unite ecosystems in a multitude of ways:

  1. Since we are democratizing credit with our lending platform it will help the Rally and Unite platforms achieve global adoption. As our partner, you’ll get access to liquidity providers and borrowers from developing and emerging countries alike.
  2. Rally lenders and borrowers will stake $RLY tokens to maximize yield and to receive the best loan terms. In this way, the $RLY token will gain additional exposure and utility. Among other factors, the reduction in total circulation should help with token stability and appreciation.
  3. The Sphere platform will provide an additional outlet for Web3 creators to seek funding at favorable terms. This could exist as a separate liquidity pool to provide those creators looking to get started with the favorable loan terms.

Closing Thoughts:
The Sphere lending platform can provide credit through crypto at a global level. It brings together communities and their members as a way to distribute that credit. The solution allows community funds a number of flexible options to validate users with an emphasis on deploying guardrails to help borrowers earn trust over time. We’re excited to bring credit to everyone by 2025 and hope you’ll be a part of that journey.

Additional Resources:
Website: (includes social media accounts and Discord link)
Pitch Deck: SphereDAO Pitch Deck - Google Slides
Whitepaper: Latest Sphere Investor Memo - Google Docs
Demo: Exploring the Sphere Credit Platform - YouTube


Hi Chris! Thank you for your proposal - we’re excited to learn more about SphereDAO.

We will review this as part of our reviewer meeting on Thursday and will follow-up with any feedback shortly afterwards.

1 Like

Thanks Amin. Feel free to post any questions or concerns here in the meantime.

Hi @diddy_ries, couple of follow up questions from our reviewer team:

  1. Can you provide more details breaking down how the 100k RLY tokens be utilized? (liquidity for DeFi pool, dev costs, marketing, etc.)
  2. What milestones are the team looking to achieve as they validate the DAO’s user and growth case from $RLY’s grant?
  3. Could new users be rewarded with the $RLY token as a sign up incentive, in addition for DAO users to stake $RLY token in the DAO?