Tokenlend – Blockhain Powered Lending Platform
Traditional loans and banking services are slow due to all their bureaucracy and paperwork. In a world of cross-continental currency transfers and decentralised databases, people are still limited by their geographical location and residency. Different currencies, legislations and complex taxation rules make your activities more complicated than it could be. Due to lack of cooperation between financial services, people are forced to deal with numerous intermediate firms with their own complex policies, fees and limits. This can turn a simple operation into a complicated and time consuming process. Tokenlend has the solution for this.
What is Tokenlend?
Tokenlend offers anyone from any part of the world a possibility to invest in real estate secured loans. The platform will be released with a pre-arranged list of secured loans from trusted EU originators. At the first stage, they will only accept mortgage loans with trustworthy real estate. To achieve the lowest risk and the highest income. Later on in the article we will tell your more about the safety of those loans
An LPN, Loan Participation Note represents the smallest share of a loan with a value of 10 Euro. Users can participate in a loan by purchasing LPN’s. They can buy LPN’s with LendCoin Tokens (TLN) or with fiat currency.
How it works
- The loan creator adds a new loan via the Dashboard. After all loan details are confirmed and verified by the staff, the loan smart contract is created and published onto the platform, so token holders can participate.
- A token holder buys Loan Participation Notes (LPN) for a loan by transferring a desired amount of Lend Coin (TLN) to the loan address. The loan smart contract generates a LPN contract which includes the principal value (the amount the token holder invested), the repayment schedule, a date stamp and loan terms.
- The Loan Participation Notes (LPN) are linked to the loan originators ERC20 wallet address. The total amount received from all token holders are transferred and locked at the Smart contract as the loan principal. Euro’s are deposited in the loan originator’s account.
- In accordance with the smart contract repayment schedule, the loan originator sends interest payments and principal repayments to the platform, which transfers it to the right owner, according to the contract. Users who invested TLN’s instead of euros will receive; TLN’s back as principal and euros as interest. Those repaid tokens will be immediately available to invest in another loan.
- After receiving the last interest/principal transaction from the loan originator, the LPN contract closes and sends the remaining interest and principal back to the associated accounts. The token holder receives TLN and sends the Loan Participation Notes (LPN) back simultaneously. The loan is closed and the wallet address associated with this loan is removed, this means the smart contract is executed.
Loans Participation Notes (LPN) will be tradable within the Tokenlend platform, so owners can sell their investments for quick liquidity. Users are not obliged to sell their LPN at the original price, they can sell the LPN’s they own for a desired price in Euro or TLN (if the investor used it to buy the LPN). All transactions will be performed by sending tokens from on the another account within the platform, based on the Ethereum network.
Lending market analysis
The Peer2Peer (P2P) lending industry is the fastest growing segment in the financial lending market. It is an alternative way to lending money virtually. It connects consumer/borrowers with investors/lenders, trough online lending platform, for example using blockchain technology. The growth is driven by lower interest rates and more transparency than alternative lending markets.
After the financial crisis in 2008, banks and financial institutions are trying to deleverage the traditional market and reducing risks. This has led to a reduction of loans for business, banks are more aware of potential risks. The P2P lending industry successfully filled this gap using alternative lending platforms, for example Tokenlend. This evolution made it more easy for firms to lend money and capital to grow. Consumers can spread risks by buying a small part of a loan.
Safety of the Tokenlend loans
Tokenlend only works with property-secured loans. They do it indirectly trough Loan Originators (EU-non-banking credit institutions), which will actually fund those loans. Loan originators will apply initial KYC and scoring procedures to final borrower, thus becoming in charge of possible loan default risks. That’s why, Tokenlend user’s funds will be secured by the whole loan portfolio of particular loan originator. In case of borrower default, loan originator will be obliged to cover possible Tokenlend user losses from its own funds. In other words, users of Tokenlend platform will receive payments as usual and won’t be affected.
Lend Coin (TLN) Token details
- ICO price: 1 TLN – 0.00036 ETH = 0.195 Eur.
- ICO token supply 93,750,000 TLN
- ICO will take place from 26 march till 9 may 2018 (45 days)
- Soft cap: 5,000 ETH and hard cap: 41,000 ETH
- Any unsold tokens will be burned
As with any ICO, it is important to know how the company behind the ICO makes money. In this case, the platform receives earnings from these 3 main sources:
- Loan fee from loan originator: This fee will be collected from every successful loan issued at the platform. This rate is 0.5% to 1% from the loan principal, this rate relates to the loan originator’s portfolios health and value.
- Loan Participation Notes (LPN) fee for user: This fee will be collected from every successful LPN trade on the secondary market. The rate will be between 1% to 5% of the selling price, depending on the reward from the original LPN value.
- Withdrawal fee: It’s a 1% fee which will be applied to every fiat currency transaction. So for example when you withdraw money out of your Tokenlend account, you will pay 1% over that amount.
In the first year of business, Tokenlend already estimated a net income of 3 million Euro from fees and the secondary market. They got to this amount by estimating and calculating the amount of potential investors, while taking into account the marketing budget and their advertising experience, times the average investment size, minus all taxes, fees and administration expenses. For the full calculation, please have a look at the Tokenlend whitepaper, page 9 (https://tokenlend.io/tokenlend_whitepaper.pdf).
There are various similar businesses in the decentralized lending platform market. But those competitors all know some downsides. Some examples:
- ETHLend: Provides crypto-to-crypto lending of almost any ERC-20 token. This sounds very handy, with a lot of opportunities, but they have a young team with low experience.
- SALT: Crypto-to-fiat lending and borrowing platform, enables to borrow fiat money for immediate liquidity using crypto assets as a security. But the platform could suffer from profit, due to volatile crypto currency prices. This causes high rates for borrowers, as a compensation of the risks.
- Lendoit: Free auction-like marketplace, interest rates are set by bidding a they have an easy loan application process, using the ERC20 wallet. But they have no collateralized loans. They treat loans using uncertain mechanism of compensation to lenders.
Tokenlend assessed their competitors and learned from their mistakes/cons. So there is a likelyhood that Tokenlend has fewer risks and downsides than their competitors because they Tokenlend has learned from the mistakes that have already been made.
Tokenlend has a very diversified team, financial experts, IT-experts, communication-officers and blockchain developers. Behind this team, there is a team of advisors, which consists of CEO’s & founders of all kind of successful financial or software firms.
14% of all tokens will be allocated to the founders and the team of Tokenlend. 50% of those tokens will be locked for 24 months (2 years) and the remaining 50% will be locked for 48 months (4 years). This means the tokens will not be tradable for a period and cannot be used to purchase LPN’s within the platform.
ICO – 75%: Token sale (45 days)
Team – 14%: Tokenlend founders and team, lock-up period 24-48 months
Pre-sale – 7%: Exclusive rights and special discounts
Advisory – 3%: lock-up period 12 months
Bounty – 1%: Various bounty activities
Reasons to contribute:
- Every LendCoin (TLN) token holder will receive a share of the company’s profit in Ether every quarter. As long as you have TLN tokens in your ERCwallet.
- You can invest in a safe EU loan, from EU-non-banking institutions, which you like and receive interest, your received interest will be easily transferable to Euro’s. So no crypto currency, but real money on your bank account.
- It’s easy to sell your Loan Participation Notes or tokens to other investors, if you want quick liquidity.
- They assessed their competitors and learned from the mistakes they already made.