Rotating Savings and Credit Associations


I’ve been seeing some discussions about fundraising and so I thought i’d share a tool that’s been used in communities to help foster growth especially for immigrant communities in the developed world.

The concept of these groups are “to allow individuals to benefit from the power of a community rather than work in isolation. To this end, you can only have a successful Djanggi house (the Community) only if the members have a some shared interest that bonds them together i.e the tribe, community, profession, family ties, religion, origin, etc – some platform on which they all agree.” (1)

How It Works?

Essentially a group of people come together to form a group and deposit funds into a pool each month, which is distributed to a different participant each month until everyone has received a share.

Now this can be built in any way a developer so chooses, but one main advantage is that being built on a blockchain using smart contracts could provide a layer of transparency/security that would not be there if lets say a human were to be managing the funds. Also, more game theory could be worked out in the code such as disincentives.

Method 1

The system could be as simple as, “each of the Djanggi is required to pool in a specific amount of money, say 100 dollars every meeting making it a grand total of 1000 dollars per meeting which is distributed to a participant each meeting.” (1)

Method 2

It could provide greater amounts of money such as, "$1,000 for each member, then a 20-member keh would yield $20,000 every month. A different member of the keh would get the pot each month – frequently in cash.

The organizer of the keh gets the first pot. The order of pay out is then usually determined by lot or by negotiation. The group, for example, might agree that a person who has urgent need to start a business might take precedence over someone wishing to pay a future college tuition bill.

This collected cash money is then handed over to one member can then used the funds for whatever plans he/she had " (2)

Method 3

After reading the 1000 SigmaUSD Bounty // ErgoScript Job Offer & Auction Coin posts, that was my main inspiration of sharing this system, as one of the more complex systems would be the southern indian’s Seettu.

"Here is one example of how a $10k, 20 month long Seettu with 20 participants, including an organizer, would work. A group of 20 people from different rungs of the economic ladder, with different monetary needs, would get together and contribute $500 each to a pool for a total of $10k in the first month. The first month’s pool would go to the organizer. In the second month, the rest of the 19 people would bid for the pool. Assume a convenient store owner is in need of money because of a severe winter storm. He communicates his bid for $7200 in the second month, the lowest amount among all the bids, and he wins this month’s pool. Each of the 20 participants will have to pay $360 this month ($7,200 ÷ 20 = $360). The next month a participant wants to start a restaurant business and wants to top up her startup capital. She bids $7,000 and wins making every one contribute $350 ($7,000÷20) in the third month. This process continues every month and on the 19th month a participant bids for $9,300 as he has been contributing diligently to the Seettu to buy a new car. On the 20th month, the last leg, everyone contributes $500 and the lump sum of $10k goes to the last person.

The table below shows the monthly payments and the returns for each individual based on a total individual contribution of $8,000 over 20 months.:


Pro’s and Con’s

Regarding method 3, "If you look at the rate of return of each participant above, it would appear the organizer got the highest return, followed by the last person and the person who lost was the restaurant entrepreneur. The bigger picture is different: banks would not easily lend money to an unproven restaurant entrepreneur. " (4)

The system “provides a significant lump sum of money to individuals who might not be able to accumulate one otherwise. That individual might, for example, use the lump sum to invest in a business.” (3)

You could consider this as type of micro finance loan more similar to in the same vein as Exle or Kiva where you are relying on trust as the main function of this system. I have often seen questions regarding micro finance systems where the main concern is what if you are not paid back?

How the Washington post puts it, " Each member must have utter confidence – almost inconceivable to Americans – that all the club members will continue to show up and pay their share every month, long after they have received their own payoff.

There is only one thing standing in the way of an individual skipping out: Purposeful default would bring shame on not just the individual, but that person’s family. It likely would lead to difficulty in getting a job among Koreans, or even getting a marriage partner." (2)


These groups provide people without access to a traditional banking system with a way to set money aside for the future relying on social bonds to make sure that members fulfill their obligations to contribute. How I see it, as there is a lack of outside funding for different groups within the ergo ecosystem, this could potentially be utilized to help each other grow. Be it a group of different projects forming their own money club to fund each others development, or down to individuals who have different ideas on advertising. That was the initial thought when proposing this but it could also be created into a type of lending platform or as simple as using a Multi Sig Wallet/Paideia.


(1) Djanggi - Cameroon Loans and credit financing system for small business loans
(3) Rotating Savings and Credit Association (ROSCA): Definition.


I loved reading that someone is thinking about this.
Another good example of such a system is quite prevalent in South Africa: Stokvels

There’s definitely a need for clear assumptions and well defined rules of the system, lack thereof can lead to pyramid type schemes see here

Good post.

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