Atlendis: A protocol for uncollateralized crypto loans

Lending platforms help projects grow, making them an essential part of the DeFi infrastructure. However, it faces one limitation in depositing collateral with the lender. Eliminating that factor could potentially help projects grow without worrying about availing collateralized loans.

Atlendis has dealt with this pointer by enabling its borrowing to access uncollateralized loans. They carry high credit risk; therefore, borrowers must first go through a credit scoring process. Once the process is concluded, the lending platform will open up a pool for borrowers while automatically pairing them with the lender.

Lenders will still hold the right to choose their borrowers and fix a specific duration of the uncollateralized loan. They additionally get the benefit of retaining control over drafting a risk profile.

Recurring crypto lending is enabled after borrowers and lenders have been paired up, and the liquidity pool has been set up. Different pools will have a single asset only, which will be determined by the needs of the borrowers. However, any pool is not shared with other borrowers to prevent it from diluting.

Atlendis plans to incorporate non-fungible tokens into its lending process. An NFT will be offered to the lender for the loan they have granted. This NFT will represent their position and underlying assets.

Providing liquidity will not go in vain as the lender will earn interest in three situations:-

  • The first primary source will be a trusted third-party protocol
  • Deciding the lending rate and actively making the liquidity available to borrowers
  • Borrower paying rewards on capital that has not been actively loaned out

Lenders are recommended to settle their dues on time, as any late settlement can add a penalty to their payments. Principle and interest will be payable upon the loan’s maturity, with a penalty to discourage late payments.

A scenario may exist where the lending rate is not acceptable to the borrowers. Uncollateralized loans can suffer due to this factor. To tackle such a hurdle, borrowers have the option to set the upper and lower limits of the lending rates.

The governance, as of now, is not decentralized. Atlendis plans on coming up with a native token to decentralize governance. The community will be able to create proposals and put a vote on them.

There is a discussion on the success of uncollateralized loans as they carry high credit risk. Collateralized loans can continue to prevail in the market until they do not restrict the growth of a community. Uncollateralized loans have their advantages and limitations. Still, the fact is denied that they will play an important role in taking the DeFi infrastructure forward, especially for future generations.

Roxanne Williams

Roxanne Williams has recently joined as a market reporter for CryptoNewsZ - the 24/7 crypto news site, where she produces recent stories, technical analysis and price updates on world's leading cryptocurrencies.

Related Articles

Back to top button