LendingBlock ICO Review – Securities Lending for the Crypto Economy - Crush Crypto

LendingBlock ICO Review – Securities Lending for the Crypto Economy

Summary

  • Project name: LendingBlock
  • Token symbol: LND
  • Website: https://lendingblock.com/
  • White paper: https://lendingblock.com/static/media/Whitepaper-English.21b2ed91.pdf
  • Hard cap: $10 million (ICO Participants receive 60% of total token supply)
  • Conversion rate: 1 LND = $0.02
  • Maximum market cap at ICO on a fully diluted basis: $17 million
  • Bonus structure: 20% bonus for presale, bonus is locked for 1 month
  • Presale or white list: Whitelist for both presale and crowdsale ongoing, register here: https://kyc.lendingblock.com/
  • ERC20 token: Yes
  • Countries excluded: USA, Switzerland, and China
  • Timeline: Presale application ongoing and will begin on April 7, 2017, crowdsale begins from April 15, 2017 (Please refer to LendingBlock's website for the most up-to-date information)
  • Token distribution date: Distributed immediately and transferable 7 days after the end of crowdsale
Video summary (video is 6:11 long):

Project Overview

What does the company/project do?


Lendingblock is an exchange for borrowing and lending cryptocurrencies and digital assets. It allows borrowers and lenders to enter into cross-chain fully collateralized crypto vs crypto lending agreements.

The cryptocurrencies that will initially be supported by LendingBlock are bitcoin, ether, ripple, bitcoin cash, and litecoin. Users can borrow any of these 5 currencies and use any other 4 currencies as collateral.

The collateral value will be monitored by the platform and there will be margin call if the collateral value falls to near the loan value to ensure there is an appropriate level of collateralization.

There will be two groups of end users:

Lenders: Target lenders include institutional lenders, such as asset managers, hedge funds, and family offices, as well as individual participants in “crowd lending” who can gain access to lending opportunities not currently available to them.

Borrowers: Target borrowers include institutional investors and market makers engaging in the following activities: shortselling, hedging, arbitrage, fails-driven borrowing, and so on. Minimum loan size will be $100,000.

Below is an introductory video of LendingBlock (video is 3:26 long):

How advanced is the project?

The idea of LendingBlock was conceived in October 2017. The demo was completed in February 2018. Here is the link to try the demo: https://demo.lendingblock.com/

Below is a screenshot of their demo.

Here is a summary of the roadmap:

April 2018: Smart contract MVP

May 2018: Regulatory feedback / alpha testing

June 2018: Customer sign up

July 2018: Regulatory approval / beta testing

August 2018: Platform launch

What are the tokens used for and how can token value appreciate?

LND tokens are used as the currency within the LendingBlock platform. All interests from the loans generated on the LendingBlock platform will be paid in LND tokens.

Borrowers will be able to pre-purchase LND tokens to meet interest payments at the start of the loan agreement, to allow them to lock in the cost of the interest payments.

The value of LND tokens hinges on (1) how much loans are being generated on the LendingBlock platform, and (2) the length of time borrowers hold the LND tokens that are used for repayment of loans.

The more activities the platform has and the longer period of time users hold LND tokens, the more valuable LND tokens should become.

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Team

The core LendingBlock team consists of 7 members. The bios of key team members are listed below:

Steve Swain, Co-Founder & CEO – 15 years of experience at various banks including Lehman Brothers, Credit Suisse, Macquarie and UBS, followed by 5 years as a technology consulting partner focused on financial services at Deloitte.

Linda Wang, Co-Founder & COO – Serial entrepreneur and product designer. Worked in Deloitte as a blockchain product designer and technology consultant. Started a mortgage lending platform company.

Luca Sbardella, CTO – Previously CTO, lead software engineer and senior quant developer at BAML, BMLL Technologies and Citigroup. Also worked as a Hedge Fund Manager at Investec, developing the technology and algorithmic part of a quantitative hedge fund product.

LendingBlock’s advisors include: Andrew Mullinger, Co-founder of Funding Circle, Charlie Beach, former Chief Risk Officer at IG Markets, as well as others.


Opportunities

  • Unlike other cryptocurrency-related lending projects which target mainly retail borrowers, LendingBlock targets institutional investors with a minimum loan size of $100,000.
  • The project is backed by a solid team with strong connections with financial institutions – we are not surprised if they are able to form partnerships with established financial institutions in the future.
  • LendingBlock takes a different approach when it comes to attracting lenders – it will seek partnership with different cryptocurrency wallets rather than building one in-house, thus increasing the success rate that it will attract supply of loans.
  • Users of those wallets will have an option to lend their cryptocurrency out in return for a rate of return – similar to generating interests from deposits at a bank.
  • LND tokens are being used to pay interests on the loans, which we believe the interest rates should amount to over 10% per year. Therefore, assuming that the platform would gain traction, the tokens would have heavy usage because borrowers need to accumulate a lot of it.
  • LendingBlock is a crypto to crypto lending platform, so it will not encounter as many legal/regulatory challenges as other crypto to fiat lending projects.

Concerns

  • LendingBlock is a centralized application which we believe do not benefit greatly from the use of blockchain. With that said, the target borrowers/lenders may actually prefer a centralized application rather than a decentralized one, at least in the beginning.
  • Margin call monitoring may be difficult to implement for cryptocurrency assets because there are different exchanges trading the same asset. “Fat finger” may be a problem that can trigger unwarranted margin calls.

Conclusion

Overall, we like both the flipping and long-term potential of this ICO. Our thoughts on buying the tokens for flipping and investing for the long term are as follows:

For flipping

Good. The idea, team, development progress, and token metrics are all above average. The potential of the project is substantial as it targets institutional investors.

The current market environment is bad but it is showing some signs of green shoots as selective altcoins have outperformed the market recently. We believe the ICO stage is where users can get LND tokens at the cheapest price.

There is a private sale which offered 100% bonus but since (1) the participants provided the funding a while ago when ether price was much higher but end up having the same conversion rate, and (2) it was only for 8% of the total tokens sold in ICO, we don’t think it is a big factor to consider.

For long-term holding

Good. With the solid team in place, we believe they can execute on their vision to generate traction from the lending as well as borrowing side. We especially like how they will partner with different cryptocurrency wallets as it is a better method than building its own.

Lending projects generally have good valuation: Ripio Credit Network is at $48 million, SALT Lending is at $148 million, and EthLend is at $59 million, all multiples higher than LendingBlock.


For more information about the ICO, please visit the following links:

* The information contained in this article is for education purpose only and not financial advice. Do your own research before making any investment decisions.

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