Incorporated in Estonia, Aave (a Fintech Company) owns and operates ETHLend. Despite its registration in Estonia, the bulk of its operations are in Helsinki, Finland. Created as a decentralized peer-to-peer borrowing and lending platform for cryptocurrency, ETHLend aims to resolve loan defaults and save lenders from losses. It also allows cryptocurrency holders to gain value from their digital assets without having to sell their assets.
How Does ETHLend Work?
ETHLend uses the Ethereum blockchain to enable secure lending with a P2P lending model. The borrower creates an Ethereum based smart contract using the data input such as loan amount, interest rate requested, and duration of the loan. The borrower also adds the address for the cryptocurrency and the amount to use as collateral.
The cryptocurrency put as collateral is transferred to the smart contract, availing the loan to lenders for funding. The collateral is transferred from the smart contract to the lender to cover the loan in case the borrower fails to repay the loan.
After receiving the tokens, the lender can choose to sell them on the open market or keep them. Because the whole process is via smart contract on the Ethereum blockchain, it’s secure. Even ETHLend cannot access the tokens held as collateral in the smart contract. This process creates a superior lending service that doesn’t require a middle-man making it less expensive for borrowers and less risky for lenders.
You can borrow various cryptocurrencies on the ETHLend platform using ETH, BTC, LEND and 100 other ERC-20 tokens as collateral for loans. The required LTV is 50% or 55% when using LEND tokens. Most loans are backed to 200% collateral.
How to Use ETHLend
Apart from unlocking value by providing borrowers with liquidity and unlocking value from held cryptocurrency, you can use the platform to fund ICOs. You can even peg ETHLend to the USD or other fiat currencies to reduce volatility for lenders.
Benefits of ETHLend
Trustless lending platform – The platform prevents anyone from manipulating or changing loans and loan data. You get full transparency about borrowers and lenders. ETHLend is also a global platform that allows access to billions of unbanked world citizens.
Leverage digital assets – Get cash now for your digital assets and use the cash as your digital assets value appreciate. ETHLend allows you to access cash for investments, business startups or emergency cases.
Risks of ETHLend
Poor disclaimers and process – The ETHLend website throw users to the deep end of borrowing or lending without a clear guideline of how the platform operates, fees charged, and other important aspects of the loan process.
Arbitration process – If two parties disagree over something can ETHLend offer an impartial third-party to listen and resolve the dispute? As the platform continues to attract more users, such problems will crop up eventually.
The ETHLend system helps minimize risks to lenders while at the same time maximize benefits to borrowers. This is evident for users unlocking the liquidity of their digital assets. The platform also enables users to continue holding cryptocurrencies and enjoy price appreciation. This takes place while unlocking the current cash value to fund a business or participate in extra investments.