Things to know about ETHLend
ETHLend is a peer-to-peer (decentralized) lending marketplace for the lending and borrowing of cryptocurrency. On ETHLend, everyone can participate without discrimination or restrictions. The platform aims at solving problems regarding borrowers not paying back the capital of a loan agreement, hence, the lenders running at a loss. The ecosystem is built around ERC-20 tokens that run on the Ethereum blockchain. For me, the introduction of blockchain technology in any project means TRUST.
ETHLend has designed its system in such a way that Ethereum ERC-20 tokens can be used as collateral. The wallet address under this protocol hence uses Ethereum Name Service domains – this is a type of address encoding protocol that permits the use of short domain names but with an “.eth” extension as against the conventional long and difficult wallet address types.
One other beauty of being based on the Ethereum blockchain is that this enables ETHLend to create a trustless feature. This implies that users don’t have to trust ETHLend with the tokens they possess because their assets are held on a Smart Contract on the Ethereum blockchain; and these contracts will last for as long as the Ethereum blockchain lasts.
While the trustless feature creates trust between users and ETHLend, a reputation based feature is used to create trust between borrowers and lenders using another token within the ETHLend ecosystem known as the CRE token; this token is basically the unit of trust. Simply put, the CRE tokens are the unit of trust while the LEND tokens, the unit of account since it is the native currency for exchanging value within the ETHLend ecosystem.
In addition, it is important to know that the reputation grading system is decentralized using the Decentralized Credit Rating model that aim to build a credit profile for each borrower in such a way that it will be accessible across various blockchains. The credit profile of the borrower is important since it shows the past loaning transactions of the borrower in order to ascertain their debt-paying prowess. This profile however, can also be accessed off-chain.
Accessing the data of lenders via a reputation system and that of the borrowers using the DCR will establish trust from both sides without glitches. These two together with the trustless feature establishes a concrete trust across all the participants.
ETHLend has already been launched and has a quite impressive rating on StateofTheDapps. It is available on mobile and so far they have had two different versions. (Omura and Kogia). The project’s roadmap is also very promising which you can read about more on their official website.
From looking at the roadmap, I realized that the project has been around for about three years now (even during this current crypto-bloodbath). You can start participating at the moment and I also believe it’s a good time to get some LEND tokens for yourself (you won’t know how the market will look tomorrow). I heard that there will be some form of discount for LEND token holders while trying to pay back their loans.
Do you even need this?
I think you do! There are a lot of ways to participate on ETHLend and a lot of use-cases for the platform but the bottom line is that holders of cryptocurrency can get cash using their cryptos as collateral. So, if you are looking for funds to invest in ICOs or other tokens, you can give ETHLend a try. ETHLend also has a use in the traditional economies (fiat-based economies). You can also with ETHLend tokenize real assets and trade them as ERC-20 tokens on the blockchain. In one word, anything can serve as collateral while borrowing on ETHLend (with just a couple of conversions).
But I think there's a downside!
That will be it on ETHLend for now guys, but before I sign out, I would like to say that I still have some unanswered questions regarding this, but nothing serious. I was thinking about this after going through the website and reading about the ideology behind the project; since the denominations for all loans is in Ether it can be quite difficult for a layperson to understand what is essentially a cash loan if they have to buy something that is not quite easy to buy using cryptocurrencies. This means, loans could be really expensive if all the transaction fees charged by exchanges are taken into consideration. With this, I’m afraid that only the actual "tech guys" will be comfortable with this (probably).
In addition to this, if what they need is fiat, then they might have to pay some additional taxes (capital gains taxes) depending on the country of their residence.
The monetary equivalent of the collateral the lender would receive if the borrower defaults could lead to a loss of value due to the unpredictable volatility in the crypto markets and for me, that’s highly risky and discouraging for a regular person.
In spite of all these, I strongly believe that this is a viable project, and that there are people that really need ETHLend out there. For example; risk taking is the lifestyle of most cryptocurrency enthusiasts. So volatility isn’t an issue for experts since they understand that all they have to do is to wait; waiting has a lot of benefits in the crypto world. You will also enjoy the benefits of earning interest on the assets you are lending out.