3.6 Ambassadors and network administration

Since mutual credit networks are built around the principle of debt repayment in-kind, they carry additional risks that are absent from traditional lending scenarios. While a traditional creditor anticipates debtors’ ability to repay debt in the same form they have received credit in (fiat currency, in most cases), the administrator of a mutual credit network also needs to trust that goods provided and services rendered by debtors will meet effective demand within the trading network. If a member has consumed credit, but is unable to offer in return goods and services that meet the needs and wants of their peers, they consequently run the risk of default, even if their financial position is healthy on paper. This risk factor tends to become less pressing as mutual credit networks grow in size, but needs to be addressed nevertheless.

As shown above and elaborated on further below, the ReSource protocol provides remedies for cases in which members are unable or not willing to repay debt in-kind. Nonetheless, these recourses are only effective if the overall health of the trading network is upheld. To guarantee such a healthy environment, the administrator of a mutual credit network will often have to engage in proactive deal-brokerage and expand the network’s membership-base intelligently, with diversity and mutually beneficial trade-relations in mind.

The ReSource protocol assigns this role to Ambassadors. Ambassadors onboard new members, provide customer success services and may proactively reach out to members in order to assist them to spend their RSD surpluses and\or rebalance their deficits. Ambassadors perform this service in return for a cut of transaction fees, generated by members they helped to onboard, and hence are financially driven to maximize transaction volume. In return for the privilege of collecting transaction fees, Ambassadors like Underwriters, also share a portion of the network's risk via SOURCE staking mechanisms.

The relationship between Underwriters and Ambassadors is a complementary one. While Underwriters assess a member’s financial risk and price their credit line accordingly as shown above, Ambassadors assess a member’s ability to contribute to the trading network in meaningful ways and assist them in maximizing the utility they gain from and contribute to the network.

Last updated