Billions Of Institutional Crypto Assets Set To Pour Through The Lendingblock Platform
That’s quite a claim!
I hear your disbelief and I get you. Hype has been a huge motivational force in crypto for a while now, and it has played its part in getting the crypto/blockchain juggernaut to chug along the road towards a beautiful future, albeit in second gear, for quite a lot of its history.
However, such a dramatic and seemingly over-hyped statement needs a real solid case to support it.
So here it is…
The blockchain lending sector
Just as in the traditional fiat lending market, the nascent blockchain lending sector has many and varied niches to fill. Retail investors, businesses and large scale institutions need to be catered for.
Each of these niches has plenty of room for competitors of all shapes and sizes so quite a few lending businesses have deployed into this new frontier, each one hoping to stake out its territory and get that important first mover advantage and become the established ‘name’ that everyone wants to do business with.
The vast majority of these lending businesses are targeting retail lending. Companies such as Celsius, Libra Credit, Nexo, MoneyToken and Salt have moved into this space and are having varying degrees of success in their endeavours.
However, who is going to cater for the leviathans of the blockchain lending sector? Here we aren’t talking about the equivalent of $1000 or so, we are talking about lending and borrowing in the hundreds of thousands and even millions of dollars equivalence of crypto in each loan!
The kind of institutions we are talking about here include hedge funds, asset managers, market makers and exchanges etc. These big hitters will want to leverage their crypto assets and will look for the best service out there.
Lendingblock started out as the vision of co-founders Steve Swain and Linda Wang. They both worked in fintech and have huge hands-on managerial experience. Steve’s résumé includes management roles in Lehman, Credit Suisse, Macquarie and UBS. Linda is a serial entrepreneur and worked with Deloitte before starting her own mortgage lending platform.
The Lendingblock team has now grown to 20 + members with over 200 years of experience in finance. Their chief software engineer and quant developer Luca Sbardella has big experience on trading desks and also as a hedge fund manager with Investec where he developed algorithms for quantitative hedge fund products.
Who are the competitors?
There are various OTC companies that already occupy this space. One particularly successful example is ‘Genesis Capital’, where more than $550 million has already passed through its books since its very recent inception only a matter of months ago.
However, OTC (although a very popular way of dealing in very large crypto assets in present times) is a manual, and therefore vastly inferior way of doing business in what is a high tech, cutting edge blockchain industry.
Institutional partners and clients
In fact, Genesis Capital has now partnered with Lendingblock and is part of the institutional ‘Alpha group’ who are presently coming to the end of platform testing in a sandbox environment. This group comprises of other partners such as Quoine and Octagon Strategy together with up to 30 other institutional entities — about a third of which are exchanges. These clients are based in Europe, Asia and the US and all will shortly be onboarded next week and throughout December.
It’s believed that quite a few more institution-sized clients are signing up to use the platform and Lendingblock are spending the next few weeks on-boarding them ready for launch for all clients in early 2019.
The Lendingblock platform
Lendingblock is a cross-chain, fully collateralized, crypto to crypto lending platform where they are the matching mechanism between the lender and the borrower.
Lendingblock’s finely tuned matching engine is being brought to a high level of sophistication, like a sleek grand prix racing car, ready for platform launch in early 2019. The advantages here are absolutely obvious — security, transparency, rapidity and infinite scalability.
The loan life-cycle
Complete coverage of the entire loan life-cycle has been taken care of with careful eye for detail including the following:
- Transparent trading — a centralised order book matches counterparties
- Collateral management — all collateral assets are closely monitored and automatic margin calls are made to restore them to correct levels
- Off-exchange settlement — assets can be taken off exchange to settle obligations or short sell etc.
- Liquidation management — adverse market movements or defaults lead to automatic liquidation of collateral which is returned to the lender
- Cold storage of assets — Lending block has partnered with industry leader Vo1t to keep funds in cold storage. Whilst being totally secure Vo1t enables clients to access funds within 30 minutes
In the world of finance complete regulatory compliance is the only way to go if you are to be taken seriously, especially by entities on the scale of funds, exchanges and banks. Lendingblock takes the line of putting itself through regulatory compliance in key jurisdictions where regulation already exists. Secondly, where regulation in not yet in force they seek out and work with regulators, and finally, where there is no regulation it looks to regulate itself under the exactly the same structures as if it were indeed regulated.
At the present time Lendingblock is awaiting a successful outcome to their submission for a DLT license with the GFSC (Gibraltar Financial Services Commission). Next jurisdiction on the agenda is the US, where Lendingblock are already in consultation with the CTFC and the SEC with the help of their US legal advisors.
Adopting a ‘wait and see’ attitude is just not going to cut it, especially in the world of blockchain finance. It’s always the case that regulators of new industries have to play catch-up because of the need to fully understand the technology and how it is used. However, they are getting there, and full and comprehensive regulation will arrive in the cryptoverse at some point… Lendingblock aims to be ready for it.
Future road map
Lendingblock CEO Steve Swain has said that they will start out dealing with a small selection of crypto assets over short term periods. However, as the year progresses the crypto selection will broaden out and loan terms will increase to 180 days. He also stated that Lendingblock will move in to the security token market and that the platform will also incorporate stable coins.
The reasons why ‘billions’ will eventually pass through the Lendingblock platform are manifold, “providing borrowers and lenders access to the first ever yield curve for bitcoin, ethereum, bitcoin cash, litecoin and others” is one — but you also need to appreciate the managerial, technical and financial experience of the Lendingblock team. This is a professional unit that concentrates on the fine details.
In addition, it is the only platform out there in its own particular niche of:
- crypto to crypto lending
- loans of between $100,000 to $5,000,000
- fully automated matching engine to match lender to borrower
Finally, very big and serious institutional clients are involved in testing the platform and according to Lendingblock “client feedback has been overwhelmingly positive”. No other company is in the crypto lending space with such a platform and I expect Lendingblock to make the most of their head start on platform, clients and regulatory compliance in order to become the leading institutional lender in the cryptoverse in 2019.
Watch this space…
Disclaimer: All the above views are my own and should in no way be taken as financial advice. All those wishing to invest in the crypto market should do their own research or use the services of a fully certified financial advisor.