You don't have to endure loan manipulation; Ethlend is finally here!
Each and every time I get an opportunity to address issues hindering the massive and global adoption of the disruptive blockchain technology, I like to make this statement clear;
blockchain technology will never be a perfect substitute for traditional and central systems if it doesn’t offer in a better way than the traditional systems already offer…
The emergence of cryptocurrencies claims to show us the way out of the fangs of corrupt commercial banks. However, there are services that commercial banks do offer that bring comfort to their customers on the surface even though it has a long range adverse impact on their future and finances. One of such services that are being made readily available by commercial banks is the loaning service. There’s a need for such services in the crypto space; a type that is superior to the traditional system. A loan providing service that leverages on blockchain technology.
I stumbled on a blockchain project that seeks to meet this need some days ago called Ethlend. I had to take some days to look into it just to be sure and know what the project is really about. I am writing to share with you what I have been able to gather and in the concluding paragraph, I’ll let you know my take on this one.
Ethlend
Just like the name suggests, is built on the Ethereum blockchain. Using blockchain technology, they offer maximum security and transparency. This is not some loan providing service as you know with that notorious merchant bank.
Ethlend is a peer-to-peer cryptocurrency lending platform that uses a unique Smart Contract. The services provided by Ethlend is provided in most countries of the world including countries where such services could be tagged as non-compliant.
There have been other lending applications leveraging on blockchain technology but Ethlend ensures that the blockchain truly supercedes, by getting rid of all third-parties. I mentioned earlier that Ethlend is built on the Ethereum blockchain; the great thing here is that Ethlend doesn’t hold funds or any other personal assets belonging to the user on their platform. There have been other platforms that use the power of Ethereum in this way; Digitex Futures, for example, hold users funds on unique smart contract on the Ethereum blockchain. This is to guarantee the security of user funds in such a way that you don’t have to trust them or fear the treachery of hackers. Another benefit of using the Ethereum blockchain is that users can also utilize Ethereum-based tokens while entering into these contracts.
The loan acquisition procedure is very simple. Two parties are always involved;
- The borrower
- The lender
Both of them will initiate a Smart Contract and through this Smart Contract reach a term which will, of course, involve the loan rate, collateral and other necessary terms. The borrower right after these terms are reached will post their token address while the sender will fund them. The moment this is confirmed the Ethlend network then comes into the picture by sending that particular quantity of Ethereum to the borrower which will be refunded with a given interest rate based on the initial agreement with the lender.
This looks more like an escrow service to me and I don’t think that’s a bad idea. In fact, I think it’s a great thing since the emergence of such project provides more use cases for cryptocurrencies and gives an opportunity for investors to maximize their profits by earning interest. However, I would like to look further to know how Ethlend makes their own profit and what they stand to gain from each transaction executed.
Ethlend is also a great substitute in my opinion since it provides a service that always brings up a great question of trust. Ethlend will get rid of all forms of third-parties stress and manipulation. The Smart Contract that initiated the procedure can’t be altered and that keeps both parties safe and protected from being exploited like we do see with traditional-centralized loan providers.