EthLend is a lending service based on the Ethereum platform. Read our EthLend review today to find out how it works.
What Is EthLend?
EthLend is a lending service found online at EthLend.io. The company offers secured loans on the Ethereum blockchain. With EthLend, users can borrow Ether using EthLend’s digital tokens. The digital tokes ensure repayment of the loan, and lenders can lend Ether without the loss of capital.
It’s a secured lending system that’s particularly popular for people in Asian countries, where the use of Ether as a currency is widespread. China, South Korea, and Japan have been some of the biggest markets for Ether (and cryptocurrency in general). Thanks to EthLend, people anywhere in the world can access Ether as a lending tool.
EthLend was created by a Finnish developer. The company is preparing for an ICO later this year.
How Does EthLend Work?
EthLend enables secured lending via the Ethereum blockchain. The lending process is straightforward. Borrowers issue a loan request. The loan request creates a Smart Contract on the Ethereum blockchain.
The borrower inserts data into the Smart Contract – like the loan amount, the interest rate, and the time to borrow. Then, the borrower inserts the digital token address and the amount of tokens that are to be used as collateral.
Once all this data is set, the borrower transfers the digital tokens to the Smart Contract. After this happens, the lender can fund the loan. Lenders can browse through loan requests on the EthLend website, then pick the borrower they like best.
What happens if the borrower doesn’t repay the loan on time? In this case, the Smart Contract transfers the digital tokens (the ones used as collateral) to the lender’s Ethereum address. From here, lenders can hold or sell the digital tokens.
The tokens can be sold on cryptocurrency exchanges to fill the lost value of the loan. That’s where the value of the tokens comes from.
It’s all based on a decentralized blockchain application running on the Ethereum blockchain. Data is not stored on centrally located servers. That means not even EthLend can move the tokens from the Smart Contract.
It’s a peer-to-peer lending service without the need for a middle man – which is a good illustration of how blockchain technology is changing the financial technology world.
To make things safer for lenders, EthLend will create a reputation system. They’re currently developing one reputation system called the Credit Token System, which is used as a reputation management for borrowers. Borrowers and lenders receive 0.1 credit tokens for every repaid loan that amounts to 1 Ether.
This is how active lending leads to credit tokens that can be used as collateral for your own loans (or sold for profit). EthLend users can “spare” other digital tokens and borrow against reputation based on the likelihood of repayment.
Using Ethereum Domain Names As Collateral
EthLend is exploring the possibility of using Ethereum Domain Names as collateral. Ever since the launch of the Ethereum Domain Name Service, there has been a huge rush to grab domain names with an .eth ending.
One goal of EthLend is to allow users to use their Ethereum Domain Names (EDN) as collateral instead of digital tokens. That could work well because EDNs contain deposited Ether, and the domain names have value of their own.
How To Use EthLend
You can currently only access EthLend through a Google Chrome plugin called MetaMask. In fact, most pages on the EthLend.io website are inaccessible until you download that plugin.
The plugin works as a connection between the Ethereum network and your web browser.
Once you’ve installed that plugin, you can request a new loan or view loan requests at the official website. It’s a straightforward interface designed to make requesting loans as easy as possible.
EthLend deducts a 0.01 Ether fee for each loan request, as well as a 0.01 Ether fee for funding a loan. Fees are used to further develop the EthLend platform.
The EthLend ICO
The EthLend initial coin offering is scheduled to take place later this year. The ICO will finance further development of EthLend.
The company will also announce a profit sharing structure for coin holders while providing discounts on loan requests and funding fees, among other incentives for ICO participants.
Who Made EthLend?
EthLend was developed by Stanislav Kulechov, a law student at the University of Helsinki. Kulechov specializes in Smart Contracts and blockchain technology. He has worked as a blockchain adviser to Finnish companies and to the legal industry.
You can contact EthLend by email at email@example.com.
Stay tuned for more information about EthLend as the decentralized lending platform continues to roll out over the course of 2017!