The Lendingblock ICO platform is a decentralized financial solution to cryptocurrency lending. They hope to create an infrastructure that parallels that of traditional securities loans, whereby lenders will be enabled to capitalize on their excess cryptocurrency and digital assets and borrowers will be able to access their necessary digital assets according to the assets that they actually possess. These opportunities will be made available on both an individual and organizational level.
How it Works
Traditional securities lending is transacted through agreements whereby the lender provides the borrower with capital or assets in exchange for collateral. Additionally, the borrower agrees to set terms of monthly interest on the loan as well as deadlines for returning the original assets. The Lendingblock ICO intends to create a smart contract protocol modelled after the Global Master Securities Lending Agreement. These can be altered by the borrower and lender should they both op to do so.
The platform’s services include:
- The potential for one or many lenders to lend the required assets to the borrower,
- Monthly interest will be automatically distributed across the lenders via the Lendingblock smart contracts,
- No current legal restrictions on digital asset loans,
- And autonomously redistributes the loans to the lenders upon the conclusion of the contract or liquidates the collateral and remunerates the lenders based from the proceeds.
Steps for Borrower:
- Platform registration – borrowers will need to develop a transparent and platform-approved profile.
- Specification – type of loan request.
- Initiation – the borrower places the collateral into the LND smart contract and waits for lenders apply for completion of the contract.
- Servicing – borrower follows through with the monthly stipends outlined in the LND smart contract.
- Completion – borrower either returns the borrowed assets or liquidates their collateral to pay out lenders.
Steps for Lender:
- Platform registration – same as for borrowers.
- Specification – type of loan request they’re willing to accept and specifications.
- Initiation – the lender selects contract and submits the assets to the borrower according to the smart-contract terms.
- Compensation – the lender receives the monthly stipends outlined in the LND smart contract.
- Completion – lender either receives back their digital assets or their share of the proceeds from the collateral’s liquidation.
In exchange for these services, Lendingblock will be charging a transaction fee that will be presented annually to the platforms users. These fees will be based on the degree of market risk involved in the transaction. Interestingly, although the whitepaper does stress the significance of the LND smart contracts as a method of ensuring transparency, traceability and insurance of collateral and asset exhange, the legal disclaimer does also declare that they can only enforce the terms of the contracts as far as local jurisdictions will allow. This should be interesting when the parties are from two different locales. I am guessing that this is mentioned as the whitepaper mentions earlier that assets ‘will not be locked’ on he platform as with usual centralized exchanges. What the implications are for the lender’s collateral is unclear to me.
However, Lendingblock does offer a possible solution to foreseeable possible points of contention by building safeguards into the LND smart contracts. This could include pre-agreement to allow for arbitration from third parties such as the Lendingblock ICO team or another trusted platform user, should the need arise.
LendingBlock ICO – The Opportunity
Cryptocurrencies and ICOs are booming markets that are currently generating a great deal of interest. This year alone has seen over ~$4,808 Billion USD (as of March 26, 2018) being generated by round 149 ICO events, as opposed to the ~ $3,8 Billion USD that totaled the entire ICO funds raised for 210 in 2017 (Coinschedule). The Blocklending ICO therefore envisions potential for the securities lending infrastructure to be adapted to these new economies to become as lucrative for lenders in this market as for more traditional markets.
Types of Users:
- Lenders – These can be either institutions or individuals. In addition to the smart contract benefits outlined above, the Lendingblock platform will allow them to earn interest on digital assets without forfeiting ownership.
- Borrowers – will now be able to borrow assets for shortselling, arbitrage, hedging and other similar ventures in the crypto and ICO ecosystem.
Types of Loans:
- Margin Lending: Peer-to-peer lending on a decentralized platform, in contrast to the current format offered by centralized exchanges that are subject to their terms and conditions as well as the availability of loaned assets purely on their platform.
- Fiat-Crypto Lending: Due to the volatility of crypto-assets, loans where crypto are backed by fiat currencies are generally quite high.
- Credit Score Loans: This form of loan relies on the borrower’s credit rating and reputation which often involves divulging personal information and is often restricted to small individual loans.
Lendingblock ICO ‘s Token Utility
LND is an ERC-20 compatible token that will be used as the token of transaction within the Lendingblock ecosystem. This means that regardless of the digital asset submitted as collateral by the borrower, the lender will receive their monthly stipends in LND tokens. Lenders can either use their LND to perform further actions on the platform, or they will need to sell their LND off-platform. This strikes me as being risky for the lenders, as there is no guarantee that these transactions will be easily actionable, as the desire for the token would depend upon the effectiveness and popularity of the platform. That said, it is likely that people will participate on such a platform, as ICO investors are generally used to the risks and processes involved in purchasing or transacting any cryptocurrency.
Lendingblock ICO’s Token Sale Details
|Total Supply||1 Trillion LND|
|For Sale (Pre-Sale and ICO)||550 Billion LND (55%)|
|Price||1 LND = $0.02 USD|
|Amount Raised||$10 Million USD|
|Hard Cap||Pre-Sale: $5.2 Millions USD
Main Sale: $4.3 Million USD
|Main Sale Bonus||N/A|
|Pre-Sale Dates||April 7 -April 14, 2018 (15:00 GMT)|
|Main Sale Dates||April 15 – April 29, 2018 (15:00 GMT)|