Stanislav Kulechov, the Founder of ETHLend, focuses on studying blockchain technology and the impact that blockchain has on the financial ecosystem. His finding that blockchain technology provides incredible benefits for lending sparked an interest to develop a decentralized lending application (DAPP) on the Ethereum blockchain network later called “ETHLend”. He believes that the greatest achievement of the project lies in delivering a stable DAPP to the public and gathering an amazing team, who all share the aim to make finance more accessible.
We contacted Mr. Kulechov to ask a couple of questions about the project, its team, and upcoming ICO.
1. What is the project about in simple words?
ETHLend is a decentralized peer to peer lending application running on the Ethereum Network. We want to develop a global lending market, open to participants from all over the world. With ETHLend the borrower is not restricted by the local lenders and is able to effectively receive finance from abroad, with the use of Ethereum.
2. Tell us a little bit about the ETHLend’s team: how many people are there? What is your overall goal?
There are currently over 20 persons in the team and we all share the same goal: to democratize the interest rate between the countries. This is done by offering more liquidity to high interest markets. There are 4 persons on development who are all working on different parts of the DApp. Some of the development work is also outsourced. This provides a great opportunity to broaden our perspectives and try different solutions.
3. Do you have a specialist in your team able to say “ I know, how to technically implement it”?
Yes, we do not just have blockchain and UI developers, we also have a working product deployed on the Ethereum main-net. Moreover, we are currently gathering an advisory board which will consist of technical, financial and legal advisors. An advisory board is essential for getting in-depth feedback on the DApp development.
4. How did you start building ETHLend?
We started by developing the Smart Contract. It was ideal to begin with the token escrow contract, which allows the collateral to be held securely in the Smart Contract until the borrower repays the loan. If the borrower does not repay, the lender can claim the tokens and realize any losses. We made many interesting findings during the development and wrote the white paper after Alpha DApp. We believe this is a big advantage for us since practice does not always follow theory. Also, delivering an Alpha for the Ethereum main-net is important proof-of-concept wise.
5. How did you come up with the idea to create ETHLend? With what are you occupied at the moment?
The idea came to me when I was researching Financial Instruments and Smart Contracts. Since the rise of the tokenization and digital asset such as tokens, I quickly understood that decentralized lending could be developed with the use of these digital tokens as a collateral for the loan. Such loans are quite interesting to users that have a token portfolio which they do not want to sell.
Right now we are developing collateral free lending, which is good for borrowers who would like to obtain a loan but do not have a token portfolio. Since we are trying to also assist the unbanked, such a market must be met. The collateral free lending will be fully decentralized as well, however, there a pre-functions that are not on-chain even if decentralized. These functions are vital for the participants in order to enforce a loan in the real world. Many of the ideas have actually come from the community, which is great.
6. How have you entered the cryptocurrency world?
I entered the cryptocurrency economy by speculating on Bitcoin a couple of years ago. Then I started to develop Bitcoin trading bots. Last year I gradually became more and more interested in Blockchain technology and found Ethereum and Smart Contracts. I think Ethereum could solve many issues and that it is quite useful in automatic financial contracts such as lending agreements. More importantly, the concept of digital tokens is quite interesting from the perspective of financial contracts. We are working hard on decentralizing lending every day.
7. Do you think the system will be more popular among individuals or companies?
Hard to tell since at the moment individuals are more keen on using cryptocurrencies. ETHLend has received a lot of interest from miners who want to expand their mining facilities or purchase more rigs. There are also growing tendencies for companies to use blockchain technology. We have received inquiries about pledging some of the ICO tokens for financing pre-sale marketing efforts. What I would like to see is that merchants who use cryptocurrencies would adopt ETHLend for financing and increasing their business.
8. What is the difference between the type of crediting ETHLend offers and the scheme “have sold the possessed currency-have bought ETH for raised money”.
Good point. Since our main financing instrument is pledging digital tokens, it provides opportunity to receive ETH when one does not want to sell digital tokens. Such might be the case when one has a token portfolio, investment funds like TaaS or ICONOMI. Funds or individuals could easily keep the possession of the token positions and still get more liquidity for growing their portfolio. On the other hand, a blockchain startup might keep more tokens at their possession when pledging the token before an ICO for a loan and repaying the loan after an ICO. A strategy like that leaves more tokens for the startup to recruit more talent.
9. Surely you understand that there is a group of people around each technology, who want to befool the system. In this regard, please, tell us whether your system has any weak points and what are you doing to battle them?
Well, when it comes to collateral based lending, fooling is limited. The reason is due to the fact that you need to provide a collateral for borrowing. A loan request without a sufficient collateral is highly unlikely to be funded. On the other hand, when it comes to reputation based lending, the situation is different. We are currently developing a method where the lender could enforce the loan in the borrower’s jurisdiction and KYC is also implemented on the reputation based lending. This is a must to avoid fraud and high default rate.
10. Let’s move to ICO. Is it already scheduled? How much are you planning to raise? What is the minimum and comfortable sum for the project’s implementation?
The ICO is divided into a pre-sale and the official sale. The pre-sale is aimed at ETHLend enthusiasts and early participants who want to receive 20% discount on the token price (1 ETH = 30 000 LEND). The pre-sale is held on September 25, 2017, at 12 AM GMT. The pre-sale is limited to 60 000 000 LEND tokens which is 6 % of the total tokens sold. We are planning to raise 2 000 ETH on the pre-sale. The minimum contribution is 1 ETH on pre-sale.
The official token sale is held at 12 AM GTM on November 25, 2017, and will last for 3 weeks – until December 9, 2017. We are reaching for 37 600 ETH and there will be 1 billion LEND available (deducted by the pre-sold tokens). The price of LEND is:
First 200 000 000 LEND: 27 500 LEND = 1 ETH (price includes 10% bonus tokens)
Next 100 000 000 LEND: 26 250 LEND = 1 ETH (price includes 5% bonus tokens)
Remaining LEND: 25 000 LEND = 1 ETH
Pre-sold tokens are deducted from the 1 000 000 000 LEND sold on the official token sale. Additional 300 000 000 LEND is contributed to founders and developers’ funds to compensate the current and future efforts on ETHLend and to attract new talent on board. The minimum contribution is 0.01 ETH.
11. How much time do you think you need to launch the project in case you obtain sufficient financing?
ETHLend has an extensive roadmap that stretches to the late 2019. At the moment we are still developing the ETHLend DApp. However, we need further resources to comply with the features set in the roadmap. We are also looking to add more developers and financial experts to the team. The basic collateral based lending is available on ETHLend but there are lot of functions that require more time to develop, such as being able to borrow Bitcoin or to use the price feed for the collateral value. We aim to have a fully sophisticated DApp by the end of 2019.
12. Investors of which level do you count on more? Do you think banks will participate in financing?
We have encountered all sorts of participants ranging from first time participants to cryptocurrency funds. There are many inquiries to participate before the pre-sale but we have not been open to that option. In terms of financing the DApp, we cannot give away much about the profiles of the lenders other than that they have been well funded (addresses that consist of over 1 million USD worth of ETH).
I do not believe that banks are interested for now. However, once ETHLend gains popularity, a lot of banks and financial institutions might act on the opportunities. For us, the most important factor is that there is a good market for the borrowers, whether the funding comes from banks or individuals.
13. Do you forecast tokens’ price rise after the project’s implementation and, if so, to what extent?
Concerning forecasting the price, it would be one of the most difficult tasks to do since we cannot know what the price of BTC or ETH would be within a couple of years. What we can guarantee is that we are providing an extensive DApp for our future participants and that we also have a program where we buy a certain amount of tokens and burn these tokens to remove the inefficient ones from the market. Combining this with an amazing team and a great idea, we believe that LEND is the token that one should keep an eye on this autumn.
14. The last tricky question: is lending good or bad?
Lending is an instrument that should be used in the correct circumstances and for the correct funding goals. Lending could be compared to other products – when consumed wrongly, they might be bad and vice versa. I believe that lending could improve lives when it saves someone’s bad financial situation. However, there are situations where people can be lured into being heavily indebted because they are unaware of better options.
Coinspeaker thanks Mr. Kulechov for the answers and wishes everything best for the ETHLend’s successful implementation.