ETHLend (LEND) – A traditional loan takes a lot of time and paperwork at the bank. Credit systems often neglect first time borrowers, young people, and citizens of developing regions and the interest rates differ widely around the world discriminating people in high interest countries. With the help of the blockchain’s new technology, ETHLend plans to change everything we know about lending. Ethlend connects lenders and borrowers all around the globe using blockchain technology, creating a decentralized market where everyone can participate. Legally binding agreements that transfer within seconds – securely handled through self executing contracts called smart contracts.
While blockchain technology gives you the ability to become your own banking institution, Ethlend allows you to become your own lending institution. The goal is to democratize lending by making it possible for anyone to join their system. Since there are no bank accounts involved, all one needs is an Ethereum address in order to send or receive a loan.
Decentralization can fix many of the problems associated with our current centralized borrowing system. Here are the three biggest reasons the decentralization of loans makes sense.
- Trust: Decentralization completely removes the need to trust your loan provider and your counterparty. Loan collateral is locked and controlled by Smart Contracts that are broadcasted on the public blockchain.
- Transparency: The Ethereum network provides a transparent ledger which is open for inspection where every transaction is recorded and can be verified. Ethereum’s transparent accounting removes the blind trust required by transactions between two banking institutions.
- Access: By utilizing the Ethereum network, ETHLend lenders and borrowers can arrange loan transactions from anywhere in the world. Loan transactions take place from Ethereum address to Ethereum address allowing unrestricted, worldwide access. Unconstrained, both borrowers and lenders can access a much broader pool of loan liquidity.
When borrowers set data, a lender will look it over and decide whether or not they agree on terms. From there the loan agreement will be created.
The two types of scenarios that will result from the creation of any loan are as follows:
- The borrower repays the loan. The lender then receives his or her original principal plus interest.
- If the borrower fails to pay his or her loan, then the lender would receive the borrower’s posted collateral.
ETHLend founder, Stani Kulechov, seems to be active with the community – more active than most small cap coins. As an investor it is always nice to see a dedicated team. The community as of now is small because the coin is relatively new; but with innovative ideas on the horizon, the community will grow and the goal is for this coin to become mainstream as it develops in places like China and Australia where cryptocurrency is a big deal. Once LEND becomes more recognized, value will go up.
Other two key team players to mention are Jordan Lazaro Gustave and Martin Wichmann – both who helped raise almost 100% of the ICO goal. While they do have a strong media and marketing team, they also have a strong range of developers and advisors that help with security and legal issues.
ETHLend plans to eventually offer unsecured loans to its user base. Unsecured loans, which the borrower does not post collateral in the case of default, are much riskier for the lender – but to reduce the risk, ETHLend plans to creat a decentralized credit rating for all its users. ETHLend borrowers will have the ability to build their reputation over time as they successfully pay back loans.
Each ETHLend borrower will have a decentralized credit rating gathered from their data. The primary source of data for these credit ratings will be Credit Tokens (CRE) which will be issued from ETHLend itself.
Credit Tokens are an ERC20 compatible token that will be exclusively used in ETHLend to represent a borrowers reputation. These tokens cannot be traded or even transferred to another dress. The more Credit Tokens associated with a user’s account the more trustworthy that account is. ETHLend manages borrower’s reputations by issuing Credit Tokens to users who successfully pay back loans. For every 1 ETH a user pays back, the will receive 0.1 CRE. Likewise, ETHLend plans to burn Credit Tokens away from account that fail to pay back loans. A user with high amount go CRE will be able to obtain loans that another user with a low amount of CRE couldnt. Users with higher amounts of CRE will be rewarded with better interest rates as well as be required to post lower levels of collateral for similar loans compared to users wit less CRE.
Lending based on previous transactions and reputation will allow ETHLend to introduce the concept of unsecured borrowing for users as well as provide more information for secured lenders. Additionally, users will be able to broadcast their decentralized credit rating to other blockchains ands three well earned credit score on applications on different blockchains as well.