A Lender's Perspective
How Lendingblock works for a lender
In our last blog, "Lendingblock Process Explained", we discussed how the platform works end to end. In this blog, we will look in more detail from Alice, the lender's perspective - to understand better who crypto lenders are, what they may be trying to achieve, and how the Lendingblock platform has been designed to help them.
So, who are the Alice's of the world? In essence, anyone who has ownership of a crypto asset that they plan on keeping medium to long term, is more interested in value appreciation than daily volatility, and would like to diversify earning by addition incremental income from their asset in the form of interest. In other words if you're an institutional investor or fund manager with long positions or an individual (HODL'r), then lending your assets on a fully collateralised basis can be very attractive.
Lendingblock is designed to be an open and decentralized lending exchange, meaning that:
- The exchange is open to all participants subject to satisfactory completion of KYC and AML approval;
- The exchange can be accessed in multiple ways, including by Lendingblock desktop and mobile tools, via an open API, and via tools provided by third parties including wallet providers and exchanges who will develop or integrate a variety of tools than access the Lendingblock API;
- There is full transparency of lending offers and requests, unlike the conventional securities lending market which provides similar financing services for stocks and bonds but operates in an opaque manner. This means lending rates to set by full price discovery, and will allow the creation of forward pricing curves for individual crypto assets;
- There is no preferential pricing as matching of lending offers and requests is done on a price-then-precedent basis, meaning that when allocating lending offers to request priority is given to the best price, and if there are multiple offers at the same price then priority is given to the earliest offer;
- Once a borrower is matched to one or more lenders, the subsequent lending agreement is formed directly between the participants, rather than via an intermediary. This decentralised approach also extends to ensuring that the terms of the agreement including payment schedule and collateral management are followed by the participants, which is by performed by Lendingblock sentinels who monitor
For any prospective lender, these features mean that they can earn incremental income on assets they want to keep, at a fair price set by the market, with the comfort of full collateralisation meaning they are not exposed to credit risk, and via a decentralised marketplace which minimises the risk of the high profile problems associated with centralised exchanges. For Alice, and millions like her, this is good news.
In the next blog, we will look at things from the perceptive of our borrower Bob, to understand who would want to borrow, for what purpose, and how Lendingblock will help.