I'm not following the logic. Assuming that I'm not loaning out all the money I have all the time, but rather if I have enough without any repayments to make those 12 loans then defaulting one only loses one, not all. So just don't over-leverage.

The thing to do would be to have a lot of loans running all the time. So start with $10k and loan it out eg $500 at a time, starting with 20 loans. If "default" means you get no money paid back, and each loan pays 20% (not annualized, just 20%), and assuming borrows either payback the loan with proper interest or default and pay nothing back, then breakeven would be about a 17% default rate. I would expect a much higher default rate for lending money to strangers on the internet, but who knows.

It seems the enforcement mechanism here is just reddit accounts. Accounts have to be a few months old with minimum karma. Fail to pay back a loan and your account gets banned and you have to start a new one. Not a huge barrier but not a tiny one either.

You could use the kelley criterion plus an estimate of default risk and loan to several people simultaneously