What benefits does ETHLend bring to the blockchain industry?
Introduction
For the past few days, I have been putting some time into researching ETHLend to properly understand everything that this project can offer to both its users and the entire cryptocurrency industry. In the first article that I wrote about this project, it was explained that the crypto economy, such as any other economic system, will inevitably gain some benefits for having reputable lending platforms facilitating this type of economic activities between any participants.
Then, in the second article, some of the most significant characteristics and their corresponding importance were properly explained, which can provide some insight in regards to the potential this project has to achieve sustainable success in an industry as competitive as this one.
The aspect that is going to be discussed in this article, is about all the different benefits that a platform like ETHLend can provide due to its sophisticated development and technology.
ETHLend’s benefits
- Benefits regarding trustless Source: by leveraging blockchain technology and establishing a decentralized network with nodes that are distributed all over the world, it becomes possible to create a dynamic in which there is no need to actually trust the counterparty, because the platform itself is capable of making sure every transaction is recorded following the rules previously accepted by each of the involved party.
This is possible thanks to different aspects of blockchain based platforms, such as the fact they can serve as an immutable ledger, and the fact smart contracts can be implemented to justly trigger any transactions according to the conditions of said contract. This way, the risks of being negatively affected by interacting with a fraudulent party are mitigated thanks to the way the platform was designed.
Benefits regarding transparency Source: blockchain platforms are naturally transparent, the information that is stored is easily accessible, and audits can be done without any problem to confirm the legitimacy of each single transaction stored on the immutable ledger. These factors make it possible to create a blockchain based lending platform where funds can be efficiently moved on a totally secure way, and without being affected by any type of national border. ETHLend, being a cryptocurrency platform, is meant to allow people from different countries and from different continents, to easily have economic interactions with each other, whether if they are looking to lend some of their cryptocurrencies or to ask for a crypto loan.
Benefits regarding access to financial services Source: ever since the creation of Bitcoin, one of the most important goals for any cryptocurrency project, is to allow people from underdeveloped countries, to have access to a global financial system where they can make transaction with people regardless of their country, this is something commonly known as the “democratization of money”, or as “banking the unbanked”.
In this sense, what ETHLend can accomplish is to allow each user to gain access to the loans they need, regardless if traditional financial institutions are available in the country of origin of the user, the result of this, is a true democratization of lending services, making them available for any person. The fact that the counterparty risk is mostly eliminated as explained before, makes it easier for the user to decide to get involved with the platform.
- Benefits regarding tokenization Source: this is probably one of the most promising features from any blockchain project. The tokenization of real-life assets such as properties or commodities, will make it possible to have more efficient transactions especially because it will bring liquidity when it comes to the management of assets that traditionally aren’t very liquid, not only this, tokenizing physical assets can also help in achieving a proper fractional ownership, which can be very useful on some occasions.
Besides, by facilitating the ownership of real-life assets, it can also be considered as a cost-effective strategy to reduce unnecessary costs when doing large sales. In ETHLend case, tokenizing physical assets could result in people easily backing their loans with their physical assets represented through a crypto token that’s used as a collateral, in their whitepaper the people at ETHLend mention the following: “In near future, we do not see any obstacles on having Apple or Facebook shares tokenized and pledged against a loan on ETHLend” Source.
The possibilities are endless, from tokenizing gold holdings and use those tokens to back up a loan, or doing the same with real state property, or with bonds and shares... by using tokenization to represent value from outside the crypto economy, the versatility that people could get when using blockchain platforms is unparalleled.
Conclusion
A lending platform such as ETHLend will certainly bring a lot of benefits to anyone that’s involved in the blockchain industry, and also to anyone that doesn’t have access to a proper lending platform, which is a very common situation in countries where financial services are lacking.
Some statistics and numbers about this project can be found in its State of the Dapps page.
DISCLAIMER
The information contained within this post shall not be taken as a financial advice. I am not a financial advisor and none of your investment decisions should be carried out based on any information presented here. You can lose all of your money by investing. The information presented in this article is for educational and entertainment purposes only.