ETHLend is a blockchain startup founded by Stani Kulechov. ETHLend aims to provide a global peer-to-peer lending market by using blockchain technology and smart contracts. Currently, borrowers in peer-to-peer lending are limited to local lenders mainly for the reason that lenders have better access to local credit scores compared to abroad. Moreover, international bank transfers might complicate the lending process and banking institutions are still not available for the 2 billion unbanked, limiting their access to finance.
Beyond local lending. ETHLend unfolds global lending by the use of cryptocurrency. Lenders and borrowers use Ethereum-native token Ether (ETH) for the loan transactions. By using Ether, the loan transactions are executed within seconds instead of days, which is a medium equivalent within the banking system on international transfers.
The use of cryptocurrency provides finance for people that do not have the access to the banking system, factually providing the ability to fund startups and people in developing countries. Additionally in developed countries, 43% of Millennials have bad credit, leaving them to struggle to obtain finance. Since centralized lending institutions and peer-to-peer lenders are mainly deciding on loans based on credit score, decentralized lending provides an alternative finance system.
More pressure on interest rates. Decentralized lending provides access to finance on global scale. Therefore, a borrower in the U.S. in not limited to local banks and peer-to-peer lenders. Instead, the borrower can obtain funding from all parts of the world, such as India or China. Decentralization creates a global liquidity pool and provides liquidity to illiquid regions or to regions where the demand for liquidity is high.
Removing borders from peer to peer lending will increase pressure and competition on regions’ specific interest rates. Currently, there are differences on interest rates between different countries. In Europe, interest rate on secured loan might be as lows as under 1%. However, in India or Russia, inflation adjusted interest rate might be as high as 14%. ETHLend aims to democratize the interest rates differences and challenge local lenders by providing liquidity from all parts of the world with the help of cryptocurrency.
ETHLend has delivered a fully decentralized application (DAPP) that is running on the Ethereum blockchain network. Anyone can access it and start to lend and borrow from any part of the world without the need of a bank account. The DAPP is accessible with MetaMask, which allows to communicate with Ethereum network directly from the browser.
Secured lending with smart contracts. ETHLend uses smart contracts to hold a collateral for the loan. Allowing easy collateral management in case of default. Currently, ERC-20 compatible tokens (such as DigixDAO) or Ethereum Name Service (ENS) domains are used to secure loans. Most popular ERC-20 tokens have a market price and ENS domains are locked with Ether, which makes them fit for collateral use. Moreover, ETHLend will soon introduce unsecured lending based on reputation from previous repayments on loans.
ETHLend is open for collaboration. Team members of ETHLend consists of blockchain and Ethereum enthusiasts from all over the world. Anyone with the aim to participate on the development of global lending market can contribute and brainstorm on Slack Or Reddit And BitcoinTalk.