P2p Lending needs a Bulletproof Protocol, not a Market.

in #bitcoin3 years ago (edited)

Given that blockchain technology provides native benefits in the financial sector, a number of projects seems to erupt with the vision of disrupting some aspect of the global financial market through this technology.

Some of this year's heaviest fund raises, like NEXO and SALT, targeted the financial sector by creating a decentralized lending platform for both private and business loans. These lending markets are now ready and people can use them to borrow money with Bitcoin as collateral.

SALT's near-$50M raise at a valuation of $100M is on par with the unrealistic funding demands and valuations of startups at the beginning of 2018. A number of other lending markets also launched as startups that raised close to $40M or more at exorbitant valuations. While it may seem that such incredible sums are necessary needs to disrupt the lending system, Vena Network stands at a stark difference from the demands of its predecessors with an ask of less than $2 million.

The difference is clear if one recognizes that Vena Network is providing a protocol and not a centralized market. Here’s some clarity.

The Difference

The previous startups that aimed to decentralized lending ended up building p2p lending markets and these use up large amounts of capital to fund the loans through an internal liquidity pool. A lending market is just as decentralized as Amazon—it’s not.

Instead, Vena Network is not a lending market, let alone an owner of a liquidity pool to fund centrally vetted loans.

Vena Network's goal is to be the protocol that powers harmonious development of lending markets that are in the hands of others. Each Vena node, an entity that has proven to posses knowledge about debt and has staked VENA tokens, can become a lender independently. The staked tokens ensure the node has enough at stake to abide by proper conduct.

The Vena protocol will simply ensure that the entity is able to become a lender in a trustless ecosystem; the platform doesn’t take over the lending process on behalf of the node.

The key difference here is that while past approaches at the disruption of the financial ecosystem, ironically, rooted on a central entity, Vena Network gives the infrastructure to develop a decentralized network of lenders by ensuring flexible smart contracts can handle any form of collateralized loans that each node prefers to issue. In the lending markets, the central market (owner) became the middleman rather than banks.

While they encroach on people's vulnerabilities a bit less than banks would, they do, however, function as middlemen taking fees for themselves and individually monitoring the approval of loans and loans set-ups.

Vena Network is just the protocol for others and thus can understandably sustain development on a fraction of the cost and funding demands of lending markets.

On a closing note, it is interesting to consider that Vena Network is designed to pull power away from centralized lenders. This actually includes the blockchain-enabled lending markets that has claimed to pave a path for decentralized lending. To power true disruption in the financial sector, Vena simply gives the world the tool to securely interact in a trustless ecosystem. With this provision, centralized control is not needed even for mediation as the Network's own Jury system will handle that.

Essential Links


🌐 Website: http://vena.network/en
💡 Whitepaper: http://whitepaper-en.vena.network/
💻 Telegram: https://t.me/vena_network


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Thanks for making this post before the public sale. It's nice to see Aragon being finally used for something good. What got my attention the most was the team. They have experience both within and outside of blockchain industry and it seems like the product will serve a Chinese market well. P2P lending became something huge in China. So there is a considerable upside. But I do need to dig deeper and do more research. Thanks for sharing!

The lesser known infrastructure solutions like Aragon are rarely used but I feel we can expect an uptick in usage as more developers flock to this market.

And good point on the competitive advantage of having we-experienced team members!

P2P lending is definitely a popular avenue for crypto I've seen quite a few projects looking to tackle this field and I think its a concept that will take a while to catch on. Centralised lending is cheap money and that's what attracts the current user base, P2P lending looks to take on a higher LSM with a lower risk of default which I think is a healthier approach but not necessarily one that would reach widespread adoption.

I wrote a piece on how stakers can benefit by greater platform adoption. Thus, they actually benefit by keeping interests low.

"Vena simply gives the world the tool to securely interact in a trustless ecosystem. With this provision, centralized control is not needed even for mediation as the Network's own Jury system will handle that."

This is fundamental, I believe that we are getting closer to the use of the blockchain in all areas, especially in the financial sector.
Of course, more and more will have the absolute opposition of the financial companies that watch over the centralization and the benefit of a few, but sooner or later it will have to assume this new reality.

Thanks for this valuable information.

Woow! You ended up with several doubts I had, thanks for taking the time to collect and analyze all the information.

Glad to hear that!
I wanted to clarify the differences between Vena Network and past projects that ventured down this path.

Your information is very good, friend. Thank you for updating us before the public sale.

Glad to hear so :)

hmmm. how they gonna get back their money, after they lend it out??

There's a collateral held in the smart contract.

When we look at the Steem delegation system than I think that is a great way of lending or investing. I haven't any experience with tze new projects but they all rely on a lot of trust. And this one is for sure hard earned. So I will sit and watch the game unfold.

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Very good example!
STEEM delegations are a proof that smart contracts can certainly be used to manage loans without an issue. It gets a little complex in real loans as delegations are limited within Steemit, but it still provides a proof of successful concept.

Indeed,
Great info.
Peer-to-peer lending has been hailed as an innovative solution that democratises financing

I was not getting much difference between Vena and others like NEXO,etc. Today's post clarified my doubt and gave a bigger picture of its differences. Thanks a lot.

A positive project is displayed, hopefully so.

It transmits a little confidence.

nice and informative post. Thank you

Welcome :)

Vena is seen as a reliable project. You gave us several important points to keep in mind.

Very well!

A lending market is just as decentralized as Amazon—it’s not.

That's interesting. I've never seen it in that light before

Instead, Vena Network is not a lending market, let alone an owner of a liquidity pool to fund centrally vetted loans.

That's awesome. I think this is better and more decentralized than existing models

However, I noticed the team members did not disclose their Linkin profiles. Think it's advisable to participate in their ICO?

It is official 2019 will be the year of "protocols"...

"The Vena protocol will simply ensure that the entity is able to become a lender in a trustless ecosystem;". Those are wise words indeed, I haven´t put many time researching about this project, but one thing is certain they have the right mentality and are trying to fix a big problem in the crypto ecosystem.

Agree Vena is trustless ecosysytem

When telling about blockchain technology.....i always agree with this technology i am fully support on it....