Decentralized Lending Platform
ETHLend is an application for borrowing and lending crypto-currencies.Users can borrow Ether, a Digital Token used to run the Ethereum Blockchain Network, by using other ECR20 tokens as a collateral on the Ethereum Blockchain network.Ethlend is a web based decentralized application which runs on Ethereum Main Network.The application works through Metamask , the browser based plugin which connects to Ethereum Network.
ETHLend is planning an ICO in near future.
A borrower deploys a smart contract which specifies the loan amount, interest and their Ethereum collateral information.The borrower then inserts the Digital Token address and the amount of tokens that are used as a collateral. After all the data is set, the borrower transfers the Digital Tokens to the Smart Contract. Now, lenders can fund the loan.
As soon as a loan is repaid, the borrower gets back his tokens . In case the borrower does not repay on time, the Smart Contract transfers the Digital Tokens to the lender’s Ethereum address. From this point, the lender can either hold or sell the Digital Tokens on Cryptocurrency Exchange to cover any losses.
For each loan request, the EthLend deducts a 0.01 Ether Fee, and 0.01 Ether Fee for funding a loan.
In future ETHLend is building a reputation system similar to Credit bureau or reporting agencies based on their previous loan repayments. They call it “Credit Token System”.
Their next goal is to provide the possibility to use the Ethereum Domain Names (EDN) as a collateral instead of Digital Tokens. This is good news for the borrowers since the EDNs do contain deposited Ether that could be used as a collateral.
- There are no banks or middle men involved in procuring a loan.
- This is fully decentralized loan platform, where people lend between each other directly. This brings down the interest rates significantly.
- Ethereum market might be ready for such crypto-lending solution.
- Trust is the biggest problem in lending. And the Credit Token System or any other integration for credit checking is not there yet for ETHLend.
- When you are new to the platform and have no accumulated CRE representing your credit score.
- Additionally, all tokens are subject to high volatility (risk through price fluctuations), which makes borrowed Ether, that is even fully covered by tokens collateral, a risky investment for the lender.
- High volatility is subjected to not only the ERC20-tokens but also to Ether. This can cause both loss and unpredictability to borrowers and lenders.