VII. Why This Can Work
The Structural Advantages
1. Incentive Alignment Is Real
Traditional bank:
Bank maximizes profit by:
├─ Charging highest sustainable rates
├─ Adding hidden fees where possible
├─ Keeping pricing opaque
└─ Minimizing customer service costs
Result: Structural conflict with customer interests
DreamPass:
Protocol succeeds by:
├─ Attracting and retaining users (requires good service)
├─ Growing loan volume (requires competitive rates)
├─ Maintaining low defaults (requires good underwriting)
└─ Building network effects (requires genuine value)
Token holders benefit from protocol success.
Most token holders are users/borrowers/lenders.
Result: Structural alignment with customer interests
This doesn't eliminate all conflicts, but it's fundamentally better alignment.
2. Software Economics Are Real
The cost structure advantage is genuine:
Traditional bank for 100,000 loans/year:
Employees needed: 200-400 people
├─ Loan officers: 50-100
├─ Underwriters: 30-50
├─ Operations: 40-60
├─ Customer service: 50-100
├─ Compliance: 20-30
└─ IT/Support: 10-20
Annual cost: $25-50M in salaries + overhead
Cost per loan: $250-500
DreamPass for 100,000 loans/year:
Employees needed: 20-40 people
├─ Engineers: 10-15
├─ Compliance: 5-8
├─ Customer support: 3-7 (+ AI)
├─ Operations: 2-5
└─ Leadership: 2-3
Annual cost: $4-8M in salaries + overhead
AI/Infrastructure: $2-3M
Cost per loan: $60-110
The 60-80% cost reduction is achievable.
3. Data Advantage Can Be Real
The copilot provides access to financial data that traditional lenders can't get:
Traditional lender sees:
- Credit bureau data (monthly updates)
- Income verification (at application)
- Existing debts (at application)
- ~10-20 data points
DreamPass sees (with consent):
- Daily cash flows
- Spending patterns by category
- Income stability and frequency
- Savings behavior
- Bill payment timing
- Financial shock responses
- ~50-100 additional signals
Reality check:
- More data ≠ automatically better predictions
- Many data points will be uncorrelated with default risk
- Need to validate predictive power empirically
- Traditional credit data still most important
- But marginal improvement is plausible
4. Community Ownership Can Work
Examples of successful community-owned protocols:
- Uniswap: $500B+ in cumulative volume, governed by UNI holders
- Compound: $3B+ in total value locked, governed by COMP holders
- MakerDAO: $5B+ stablecoin supply, governed by MKR holders
Key success factors:
- Real utility (not just governance theater)
- Aligned incentives (token holders benefit from protocol success)
- Progressive decentralization (centralized start, decentralize over time)
- Quality community (engaged, long-term holders)
DreamPass can follow this playbook:
- Real utility (rate reduction + governance)
- Aligned incentives (users are token holders)
- Progressive decentralization (ship product first, decentralize later)
- Quality community (self-selected via copilot)
Reality check:
- Most DAO governance is still theater
- Voter participation is typically less than 5%
- Whales often dominate despite safeguards
- But it's possible to do better than shareholder capitalism
The Market Opportunity
US consumer credit market:
- Total credit card debt: $1.13T (Q2 2024, Federal Reserve)
- Total personal loans: $222B (Q2 2024)
- Average credit card APR: 24.8%
- Average personal loan APR: 12.3%
Our opportunity:
- We're not going to capture the whole market
- Realistic target: 0.1-1% market share in 5 years
- At 0.5% share: $6-7B in loan volume
- At that scale: Protocol is sustainable and valuable
Why this is achievable:
- Not trying to be everything to everyone
- Focus on underserved segments initially
- Build moat through data and community
- Scale progressively, not aggressively
Reality check:
- Market share is winner-take-most (network effects)
- Being 10th best doesn't work (need to be top 3)
- May end up as a niche player, not mainstream alternative
- But even niche success creates meaningful value