Skin in the game is a concept used by various investment platforms where a loan originator needs to hold an equity stake in its loans. When skin in the game is used loan originators that place loans on Debitum are required to keep a certain percentage of each loan. For example, if a loan originator has agreed on a 5% skin in the game, the originator would need to hold a € 50 stake in a € 1000 loan. This prevents loan originators from offering excessive amount of loans. Moreover, this allows to align investors' and loan originators' interests.
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What is skin in the game?
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