Cryptocurrency borrowing and lending is heating up as platforms begin to create services to facilitate even secured cryptocurrency lending.
Here is a reality of the cybercurrency age. About 40% of the $300 billion of market value in just Bitcoin belongs to about 1,000 users. Up until now, they didn’t have many options on where and how to spend that asset wealth. And sure, it is cool to consider buying a mansion in London or New York or even Dubai with all that crypto cash. But increasingly, services are popping up to create other solutions.
Including the ability to lend out that cyber wealth to others and keep ownership of a form of currency many have become, literally, quite attached to.
Up until now, there have been a few attempts to set up lending services, but because the price of cybercurrency remains so volatile, repayment terms can be equally difficult to successfully conclude. This is one of the reasons that cryptocurrency lending has also been so controversial (and still is). This month, in Texas , for example, the state issued cease and desist orders against a cryptocurrency lending firm that promised huge returns for investors.
That has not deterred entrepreneurs from trying to tap if not crack this market. And for the last quarter, new (and creditable) services have been entering the market which attempts to create at least a little buffer between current market volatility and real-world practicality. It is hard to both lend and borrow any asset whose market cap increases as much as the major cryptocurrencies have just in the last year. Or which has seen such dramatic price swings.
One of those bitcoin billionaires, Roger Ver , also known widely as “Bitcoin Jesus” for his early proclamations about cryptocurrency, has also already stated that he would be “very interested” in using his holdings as collateral for digital loans.
Industry analysts are already predicting the birth of a multi-billion dollar crypto backed lending industry.
The Lendingblock platform aims to be the first securities lending platform in the crypto economy. It is an open exchange for cryptocurrencies, where borrowers and lenders are matched in a simple, safe and transparent way (in other words it is not strictly peer-to-peer).
The aim is to enable holders of digital assets to earn stable and secure returns without sacrificing ownership, while giving borrowers who hold digital assets the ability to use them as collateral to obtain loans at market rates to support a range of financial activities including direct funding, hedging or investing. These borrowers include institutional investors and lenders, who are currently either not attracted to the cryptocurrency world or are prevented from participating in it because of regulatory hindrances.
Now Lendingblock is bringing a different kind of securities lending to the crypto world. Lenders and borrowers are matched by rate and date. Borrowers can lend, cross chain, across any digital currency. This means that borrowers including fund market makers and traders can access assets easily to support trading, fund working capital or investment funding needs.
Individual smart contracts are issued for each loan, protecting both party’s rights. Actively managed collateral and advanced cryptographic security protect both borrowers and lenders.
All loans are fully collateralized.
Lendingblock is creating the infrastructure to secure the future of the digital crypto economy. It enables cross blockchain value transfer for the crypto lending market. The platform will be launching with Bitcoin, Ethereum and Ripple as the first lending currencies.
Funds are held in a cryptographic escrow between different blockchains and released through Ethereum smart contracts. Lendingblock also uses oracles to provide strong guarantees for cross-chain lending contract initiation, collateral management and repayments.
API connections for institutional investors and traders will offer public data on loan order books, rate tables across different currencies, user account information and give users the ability to place lending and borrowing requests.
Wallet integrations with multiple wallet providers are also planned.
The platform works in slightly different ways for the lending and borrowing parties, with benefits for both.
Lenders: Investors who wish to earn a return on their digital assets without sacrificing benefits of ownership commit to offers that match their lending appetite. At the end of the loan, the repayment is distributed to the lenders and the collateral is returned to the borrower.
Borrowers: Parties in search of a loan can specify which digital asset they need, plus list collateral and select the interest rate they can offer. Borrowers regular interest payments are tracked and distributed to lenders on time.
Lendingblock’s revenues are generated from borrowing and lending fees. This is a market that could easily generate over $300 million in the next three years, and the London-based startup is moving strongly to claim it’s part of it.
Initially bootstrapped by the founders, the business has just completed a private token sale which raised $500,000 from investors. Institutional interest has continued to remain high.
Here are the details of the upcoming LendingBlock token sale:
Token name: LND
Token base: ERC-20
Token supply: 600 million to be sold in pre-sale and ICO
Token sale target: $5 million (soft cap), $10 million (hard cap)
Token price: $0.01667 (pre-sale), $0.02 (ICO)
Token sale dates: Presale, April 7 – 14th, 2018. ICO April 15-22, 2018
Individual cap: Minimum $25,000 and maximum of $500,000 during pre-sale and maximum contribution during ICO is $25,000
Accepted currencies: ETH only