The integration of blockchain technology into multiple facets of our world could greatly streamline many industries that affect our day-to-day lives, and financial lending is the ideal forum. A natural progression of P2P lending, blockchain application can make the entire lending process more seamless and greatly reduce the amount of time the process takes.
Here are a few of the players in the early days of this promising technology.
SALT (Secured Automated Lending Technology)
According to its website, SALT is the only platform built to facilitate loans secured by blockchain assets.
“Distributed ledgers represent a paradigm shift in the storage and transfer of assets and, for the first time in history, there is a perfect form of collateral: blockchain assets,” the website reads.
Basing loans on blockchain assets makes creditworthiness no longer an issue. Writing for Forbes, Roger Aitken reported that SALT asserts that, by focusing on the borrower’s assets instead of their credit score, it is able to “dramatically reduce the complexity and cost of the loan process.” SALT seeks to streamline every step of the loan process, facilitating a new blockchain-backed lending market.
The investor retains the value of their holdings, with any earnings or losses that occur to the wealth during the process reverting completely to the borrower.
Among the potential assets to blockchain-based coin lending are that it is a realm where crypto wealth is recognized. Company CEO Shawn Owen, speaking with Forbes, said “if you’re a holder of blockchain assets, a lot of your financial wealth is not being recognized by lenders.” This technology is poised to open those funds to be leveraged and also break down geographic constraints while bringing the potential for the unbanked and underbanked into the financial world.
SALT offers three value tiers and products.
- The basic membership package affords one up to $10k in term financing, paid only in USD; terms go from three to 24 months
- The premier package offers up to $100K in term financing with a line of credit. This can be paid in USD, Euro, GBP, JPY, and RMB. Term lengths are anywhere from one hour to 36 months.
- The enterprise package provides access to over $1M of term financing and a line of credit to be paid in an ad hoc currency selection, dictated by metered terms. This package offers two benefits that the premier package doesn’t–API integration and cold storage enterprise wallets.
All three packages offer no pre-payment penalties, market data and educational resources, and loan management web portals. The premier package offers access to the SALT hardware wallet, customizable loan terms, and early access to new products. These are not offered with the basic membership package.
All member lenders are Regulation D accredited investors, and while credit checks are not done on borrowers, SALT undertakes full Anti-Money Laundering (AML) and Know Your Customer (KYC) verification checks.
The loans, which sport interest rates in the 10 to 15 percent range, are not transferable via the blockchain, as they become securities and are thus transferable through existing financial channels.
EthLend is an Estonian-based fully decentralized P2P lending platform on the Ethereum blockchain for lending Ether as tokens for collateral. The platform uses any ERC20 token. All lending on the platform is facilitated through the use of smart contracts, a feature unique the Ethereum blockchain.
The company’s Twitter feed from January 3 reports that it has reached nearly $600K USD in lending volume. The company offers address-to-address loans that are sent within minutes, with no middle men, assuring that no one, not even EthLend, can stop one’s lending or borrowing.
With a roadmap that goes into Q4 2019, the company seems to have a well-plotted vision. Included in that roadmap are:
- Q1 2018—Plans for a Decentralized Credit Rating (DCR), which will draw on Credit Tokens (CRE) and previous loans on EthLend to create a decentralized credit rating that can be used for other Decentralized Applications (DAPPs) as well
- Q2 2018—The addition of bitcoin to the DAPP
- Q2 2018—CRE from third party services, such as uPort and Civic, which can be used when the borrower doesn’t have enough previous loans
- Q4 2018—the incorporation of the lending of other altcoins and tokens
- Q3 2019—expansion beyond Ethereum to other distributed ledger networks
Rating the company, CrushCrypto.com says “use cases may seem limited for now, but we believe as tokenization of real assets becomes more prevalent, EthLend has a good chance to become a market lender in this space.”
A pre-ICO lasting from September 25th to October 25th of last year sold 62.5 million LEND available at a sale price of 1 ETH = 25K LEND. The ICO, which ran from November 25-30, saw the company raise $17.86M USD, essentially 100% of the $17.9M goal.
In Q4 2107, the company opened up to USD-based loans and installments.
The platform is not without some aspects that may cause concern for some industry insiders. Certain functions are only accessible with LEND tokens, such as featured loan listings and email marketing for new loan requests. Also, EthLend is currently only available through the Eidoo ICO search engine.
On the upside, only dealing with crypto-to-crypto borrowing means there will be fewer regulation restrictions when those start to be handed down. Also, some insiders fear that other blockchain lending platforms that deal in fiat currencies might be swallowed by the banks, as they do open their transactions to become securities.
ICO Bench rates EthLend at 4.4 out of 5.
Celsius is a New York-based non-profit organization (NPO) based on the Ethereum blockchain, which extends instant credit through a decentralized P2P network. The network is akin to a membership organization that consists of both lenders and borrowers. Members must complete a Celsius profile to join.
Celsius touts itself as the “first crypto wallet that allows users to earn interest (7%) on their held coins” and allows borrowers to use cryptocurreny as collateral to gain access to USD loans. Using a token called a DEG, Celsius deals in BTC, ETH, and USD and uses smart technology to bind the lender/borrower relationship.
Borrower’s metrics are ascertained by using the Celsius Score, a digital credit score calculated by using various traditional metrics, such as FICO scores and mortgage history, as well as non-traditional ones such as Uber and Amazon histories. Lenders choose their borrowers using this score to determine risk.
An NPO acting in the best interests of its users through lower fees and no hidden fees, Celsius’s ultimate goal is to give credit to large blocks of the public who are underserved by banks.
ICO Bench rates Celsius at 2.8 out of 5. The central reason for the less than stellar mark centers around the company being long on marketing, but less so in technology terms.
Some Other Players
Seven banks, including BNP Paribas, HSBC, ING, BNY Mellon and State Street, have joined forces with R3 and Finastra to develop a blockchain-powered marketplace for syndicated loans. The first pilots have already been successfully completed.
With the early support of seven global banks (two of which do not yet wish to be named), the platform will cover 10% of the syndicated loan market when live next year.
An expansion under the Russian LightFin.ru brand, Inspeer deals in crypto and fiat. The company serves three million regional customers and processed 200,000 loans in its first year.
For those who like to be in the know a little earlier, there is LendingBlock, a securities lending platform for crypto and digital assets. Users can lend and borrow cryptocurrencies against collateral of other cryptocurrencies in a completely decentralized and private manner. Watch for a Q1 token presale and a Q3 launch. LendingBlock is not currently working with fiat currencies.
The business of cryptocurrency lending is looking like the Wild West. There are some promising players to consider, and more if you look. SALT has Erik Voorhees associated with it, who founded Coinapult and gambling site SatoshiDice. He is a long-time cryptocurrency and blockchain advocate.
Do your own homework to make informed choices, but if crypto lending is in you future, start your research with these platforms.
Written with Paul Keenan.