Lendingblock is an
open exchange for borrowing and lending cryptocurrencies and digital assets. It
allows borrowers and lenders to enter into fully collateralized crypto vs
crypto lending agreements. Lenders can earn incremental interest income on
their long term investment in digital assets, while borrowers can use their
digital assets as collateral to enable borrowing to support shorter term
trading, hedging and working capital needs. Lendingblock is creating a parallel
financial service for the crypto economy to securities lending in traditional
capital markets.
Lendingblok Mission
Lendingblock is a
protocol and platform designed to enable and encourage borrowing and lending
within the crypto financial system, bringing the economic benefits of lending
(increased spending and growth, connecting capital supply and demand) to the
distributed blockchain economy, but minimising the need for inefficient
intermediaries that are unnecessary in the cryptographic asset environment.
Lendingblock will be
the first exchange for crypto asset backed loans that meets the needs of
institutional and individual borrowers and lenders in the cryptoeconomy.
Platform definition
Lendingblock is
creating an open exchange for borrowing and lending cryptoassets. Holders of
digital assets will be able to generate stable and secure returns without
sacrificing the benefits of ownership, and borrowers who hold digital assets
will be able to use these digital assets as collateral to borrow at market
rates to support funding, hedging or investing strategies.
1.
End
Users
The end users of
Lendingblock will be entities looking to borrow or lend cryptocurrency assets.
These entities, whether retail or institutional will fall under two categories
- lenders and borrowers.
- Lenders
Lenders using
Lendingblock will include institutional lenders, such as asset managers, hedge
funds, and family offices; and individual participants in “crowd lending” who
can gain access to lending opportunities not currently available to them
directly;
- will
be able to generate incremental interest income from their portfolio of
assets without sacrificing the long-term benefits of ownership,
- will
have the security and protection of full collateralisation and automatic
application of lending default terms.
- Borrowers
- will
be typical of users of existing securities lending, including hedge funds,
investment managers, market makers, and proprietary traders;
- will
have a need to borrow digital assets for mutiple purposes, which may
include
- hortselling- if a trader wishes to take a short position in the
belief that the price of an asset will fall, they will borrow the assets
and sell them at the current market, then buy those assets back in the
future at a (hopefully) lower price to repay the loan;
- Hedging- a derivatives market-maker, for instance, may need to
sell assets that it does not own to hedge a linked derivatives position,
then borrow digital assets to meet its settlement obligation;
- Arbitrage- a trader may sell assets short against an offsetting
derivatives position to take advantage of dislocation between cash and
derivatives markets.
- Fails-driven
borrowing- if a broker or custodian has
a settlement obligation but does not have the assets in place, it may
borrow assets to ensure that it can meet its obligation and thereby avoid
incurring settlement fail penalties.
3.
will be able to access
borrowing services that do not currently exist in the crypto economy at a price
and fee structure that is transparent and based on market supply and demand.
Process
The Borrower process
has five stages :
- Registration, in which prospective borrowers create an account and
complete identity verification and screening;
- Specification, in which borrowers complete profiles specifying
details of the loan they are seeking, e.g. loan principal asset and
amount, duration, maximum interest payable, and collateral to be pledged.
After verifying that the collateral is available to prevent spurious
offers, this borrowing request is then automatically matched to lending
offers;
- Initiation, in which the borrower places collateral into the LND
smart contractmand waits for lenders to place principal into the smart
contract until the loan total is reached;
- Servicing, in which the borrower makes scheduled payments that
are distributedmto the lenders by the LND smart contract, and as required
adjusts the amount of collateral to reflect any change in value; and
- Finalisation, in which the borrower completes repayment of the loan
principal which is returned to the lenders, and the collateral is returned
to the borrower by the LND smart contract, or in the case of default by
the borrower the collateral is distributed to the lenders to cover their
investment.
The Lender process has
five stages:
- Registration, in which prospective lenders create an account and
complete identity verification;
- Specification, in which lenders first complete profiles specifying
what they are looking for, e.g. how much they wish to lend, for what
duration, desired minimum interest rate, and acceptable collateral. After
verifying that the principal is available to prevent spurious offers, this
lending offer is then automatically matched to loan profiles that meet
their requirements;
- Initiation, in which once borrowers have submitted collateral,
lenders place loan principal into the Lendingblock smart contract, at
which point the principal is sent to the borrower;
- Operation, in which the lender receives scheduled interest
payments from the LND smart contract; and
- Finalisation, in which the lender receives repayment of their
principal, or in the case of default by the borrower receives the
collateral to cover their investment.
Access
Access to the
Lendingblock platform can be made in three different ways:
- Direct, in the form of dedicated web and mobile tools aimed
at individual and institutional users;
- Integrated, allowing individual users to borrow and lend directly
from within popular wallets or exchange clients once they have completed
registration with Lendingblock;
- As
a service, in the form of Lendingblock
APIs allowing developers to create customised end user tools or
integrations into applications.
Functional components
The primary functional
components of the Lendingblock architecture are organised into six logical
groupings:
- User
registration and maintenance services ,
which are responsible for
- Creating
and verifying new user accounts, including completion of KYC and AML
processes, and
- Maintaining
user permissions, in particular where there are multiple users from a
single client organisation.
- Order
book management services ,
which are responsible for
- Exposing
the current contents of the order book, allowing users to view current
borrowing offers and lending requests
- Adding
an order, allowing authorised users to submit a new lending offer or
request;
- Updating
of an order, for example allowing an order to be withdrawn or to mark an
order status as filled.
- Matching
service
which is responsible
for identifying borrowing requests and lending offers that will form the basis
of a lending agreement. This service is invoked when new orders arrive, for
example receipt of a new borrowing request will result in existing lending
offers being allocated using price then precedence prioritisation, and vice
versa.
- Lending
agreement initiation ,
which is responsible for
- The
creation of a smart contract identified by the matching service.
- Recording
acceptance of the legal terms of the agreement by all parties;
- Confirming
initial collateral payment from the borrower;
- Confirming
initial principal payment from the lender(s); and
- Releasing
loan principal to the borrower once all parties are ready.
- Lending
agreement maintenance ,
which is a smart contract responsible for
- Managing
receipt and distribution of interest payments from the borrower to the
lenders as defined by the payment schedule and individual lender
contributions;
- Managing
the synchronised distribution of repaid principal to lenders and the
release of collateral to the borrower at the conclusion of the loan;
- Initiating
the liquidation of collateral and distribution of the proceeds to
lender(s) in the event of borrower default, for example where a payment
condition has been breached by the borrower; and
- Managing
the level of collateral provided by the borrower, including requesting
additional collateral should the value fall below the floor threshold or
releasing collateral should the value rise above the ceiling.
WEBSITE: http://lendingblock.com
TELEGRAM: t.me/lendingblock
TWITTER:https://twitter.com/lendingblock
FACEBOOK:https://www.facebook.com/lendingblock/
REDDIT:https://www.reddit.com/r/Lendingblock/
AUTHOR cenatown
