ETHLend - The Decentralized Marketplace To Get Easy Access To Loans [DApp Review]

in #dappreview5 years ago (edited)

If you are trying to start up a company or you already own one but trying to expand, the very key thing you'll need is "finance" right? Before now, banks have been the sole option that people have resorted to when they want to borrow funds. Of course, because of the terms and conditions with borrowing money from banks, you may not get the required loan when you've requested for it. Also, some banks have standardized interest rate which is non-negotiable and this has limited some start-ups from accessing loan facilities from banks. Hey! With the introduction and integration of blockchain technology into the financial world, another option has arisen to provide flexible loan facilities in a decentralized framework to solve the inherent challenges of the traditional bank lending services - here I present ETHLend to you.


[Image Credit: ETHLend]


Overview of ETHLend


ETHLend is a financial Decentralized App built on the Ethereum blockchain technology by Stani Kulechov of AAVE to provide a marketplace that will facilitate peer-to-peer lending or borrowing of digital currencies globally. The action word here is "peer-to-peer", this means that lending and borrowing in ETHLend is devoid of any standardized interest rate and the terms of agreement between the parties involved (the lender and the borrower) are done in a very transparent way which are saved in smart contracts.

The major purpose of the establishment of ETHLend is to give people an option of sourcing for funds within the crypto space without going to banks to borrow funds. This has placed ETHLend as the world's first truly decentralized lending platform and has also earned it a place in the StateOfTheDApps raking. Isn't it awesome that blockchain technology has also found application in the financial sector?

The loan facility provided by ETHLend is in form of ERC tokens (of which DAI and ETH are the base currencies) but the platform has recently included BTC and over 200 Ethereum-based tokens to increase the adoption of ETHLend platform worldwide. One may be piqued to ask how ETHLend works. Here's how it woks in a nutshell: When a user places his intention to borrow funds from ETHLend, his proposal will be made available on smart contracts and advertised on the platform where a potential lender will be able to access it, after which the two parties will have to agree individually on their own terms of reference and interest rate and the transaction will be sealed.

The choice of loan is totally dependent on the preference of the parties involved. For example, there is the one known as "pegged loan". This type of loan facility is only given with a stable digital currency which has been paired to fiat (like DAI currency). In this type of loan, the parties involved will not worry about volatility of digital currency which can lead to depletion or increment in the value of the loan. You can also make a choice from other cryptocurrencies. I'm sure you are already piqued to know how to get started with ETHLend.


Accessing The Loan Services Provided By ETHLend


The first thing to do to get started is to register and create an account in ETHLend. Being an Ethereum-based platform, you are also expected to install Metamask plugin so that you can integrate your Erc Wallet into your ETHLend account. Upon sign up, you have the option of becoming a lender or to be a borrower but you can also function in both capacities - that is; you can switch from borrowing to lending with the same account without having to create a new account. When you become a lender, you will have access to some perks like; you can stake your DAI tokens on the platform and you'll be remunerated with LEND tokens which is the internal token of ETHLend platform. Your LEND tokens can be sold for fiat or converted back to DAI and re-staked for bigger rewards. The amount of DAI you stake determines your level of influence in ETHLend ecosystem and the rewards on staked DAI tokens increases geometrically with the increase in DAI tokens.

The rewards earned from staking DAI are raised from the lender's fees per transaction. To borrow funds from ETHLend, after you have created your account, you just have to click on "start borrowing" button and fill up the required forms.


[Screenshot by me; @samminator]

There is also a loan calculator in the login page to enable you calculate the equivalent of DAI-to-BTC you are borrowing. The calculator has a slider and you can set it to the required LEND tokens you want.


[Screenshot by me; @samminator]


How Safe Is Your Token?


This might be the first question that will come to your mind about ETHLend. Don't worry, ETHLend has got your back! Firstly, every transaction detail is saved immutably in smart contracts in blockchain and the only people with access to these contracts are the parties involved in the loan (the lender and the borrower) which has led to absolute security of funds. More so, when a borrower places an intention to get a loan facility, he must stake a collateral which can be released to the lending party in an event where the borrower fails to pay or falls short of the loan agreement. However, the best part of this is the fact that the loan is mutual and interest rates can be deliberated upon by both parties involved.


[Image Credit: ETHLend]


Conclusion And Reviewer's Comment


First of all, I will give kudos to ETHLend for bringing an easy option for people to borrow money using blockchain technology. Also, I will give them another kudos for the simplicity they have integrated into their portal - you do not have to be a tech or crypto guru to find your way around the portal. However, their services are currently excluded from U.S residents, I believe they need to resolve this challenge so as to make residents of U.S to also gain access to their services. On the overall, I give ETHLend a 4.5/5 rating.


Disclaimer: The content of this article is not meant to serve as financial advice, please do your own research.

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