There are currently many “lending” platforms launching in the blockchain ecosystem, but not all of them are truly focused on decentralizing the tightly controlled finance industry. Many of the so-called lending platforms launching initial coin offerings at this point in time are simple high yield investment programs that allow investors to “lend” their capital to managed funds and generate guaranteed returns.
There are, however, a number of lending platforms that are truly attempting to decentralize the finance industry. Some intend to decentralize peer-to-peer lending process, allowing small to medium enterprises to access finance across borders, and in cases where it may otherwise not be possible.
An interesting new blockchain based lending platform is planning on decentralizing the lending component of margin trading. Lendroid is a highly disruptive non-rent seeking open protocol platform that intends to facilitate decentralized lending, margin trading, and short selling.
In order to generate the funds necessary to develop their platform, the creators of Lendroid are set to launch an initial coin offering that allows supporters and investors to capitalize on the initial stages of the project.
In this article, we’ll take a look at the Lendroid platform and find out how it works. We’ll also break down the specifics of the upcoming Lendroid ICO and examine the benefits it offers to investors to help you determine whether it’s worth investing in.
What Is Lendroid?
The Lendroid platform is aiming to solve the current issues that contemporary centralized exchanges face by creating a global shared lending pool accompanied by a symbiotic off-chain infrastracture. This off-chain infrastructure is supported by two different types of incentivized participants- Relayers, and Wranglers.
In a simplified explanation, Lendroid makes it possible for lenders to contribute their offers to the global lending pool through Relayers, who then work to match these offers with traders that intend to leverage the capital in margin trading. These traders are then able to generate a profit and repay the lenders.
Relayers play an integral role in the architecture of the Lendroid platform. As the first point of contact for both lenders and traders, Relayers take up the liquidity related functions of an exchange in the decentralized architecture of the Lendroid blockchain. These Relayers also manage loan offers, provide an interface, and manage both order books and offer books.
The function of Relayers is integral to the operation of the Lendroid platform, and as such they have complete access to the global lending pool. The entire collective of loan offers is recorded with the entire community of all Relayers active on the Lendroid protocol.
Wranglers are the other incentivized actors within the Lendroid protocol. These actors are intended to perform computationally intensive roles, and monitor margin accounts. Wranglers maintain the health of the Lendroid ecosystem by monitoring and “wrangling” terminal accounts at a liquidation level. This process also allows Wranglers to protect the interests of lenders.
Wranglers keep tabs on every stage of development within the Lendroid ecosystem, observing the creation of margin accounts, recording position changes, the adding of collateral, and the final liquidation of the account. When Wranglers observe a change in state, they notify the Lendroid smart contract system, which then triggers an Oracle call that subsequently assesses the margin level of the account.
How Lendroid Works
Ultimately, these actors create an environment in which borrowers are able to pledge digital assets into an escrow account onto the Lendroid platform. The Lender that provides this capital to the borrower enters into a smart contract with the borrower that includes specific terms for the loan programmed into the smart contract.
If the terms proposed by both the lender and the borrower match, then the Lendroid protocol executes the smart contract. This process locks the collateral and releases the funds to the borrower. Once the loan obligations are satisfied by the borrower, collateral is automatically unlocked. If the borrower should default, or if collateral drops below an agreed loan to value, the collateral is automatically liquidated.
In the case of margin trading, a trader begins by depositing collateral. Traders are provided with the ability to borrow up to a specific leverage point where the margin level is greater than the initial level, which is designated via community governance.
The funds provided to margin traders are sourced from a shared lending pool to which lenders are able to submit offers. Leveraging borrowed funds, margin traders interact with order books in order to calibrate positions to reflect their expectations from future price movements.
As the Lendroid platform is compatible with any ERC20 based token, a wide variety of different assets can be used as collateral against a loan. Traders are also provided with the ability to use a combination of different ERC20 based tokens at the same time. Community governance will allow the protocol to add or remove support for a token depending on the current volatility of the token.
The Lendroid ICO
The ICO will release 6,000,000,000 LSTs, or Lendroid Support Tokens. 2,400,000,000 of these tokens will be available for public sale, while 20% will be reserved for the Lendroid team, 20% for early contributors and advisors, and a final 20% for partners, community, and bounties. There is currently no set date for the Lendroid ICO, but it’s possible to sign up for updates via the Lendroid site.
The Lendroid platform is one of the most interesting lending ecosystems proposed recently, and incorporates a number of unique architectural elements- such as the ability to use any ERC20 token as collateral- that make it a stand out ICO in the lending industry. If you’re looking for a strong ICO to keep an eye on, Lendroid is definitely worth watching.