Margin lending is a vital part of any financial system. Many traders want to use leverage to amplify their exposure to a given market, and Lendroid has a novel solution for crypto traders.
Using leverage is generally done in an unsophisticated way by retail investors. A broker provides margin lending options, and a trader is bound to whatever conditions and fees their broker creates.
Lendroid Offers Better Options
Needless to say, professional investors aren’t going to let a broker dictate the terms of a contract, or control the costs to carry a position. There are also other reasons why advanced investors would want to control the source of their margin funds.
When an investor takes on a margin loan from their broker, the position is only as good as the broker’s credit risk. Many institutional investors have a better credit rating then the exchanges they deal with, which makes using the broker as a margin lender impossible.
Lendroid is a decentralized lending engine to power financial services on the blockchain. The Lendroid Support Token is a cryptocurrency that is designated by symbol “LST”.
The platform focuses on resolving the shortcomings of centralized exchanges by generating a global shared lending pool that is comprised of four parties: the lender, the relayer, the margin trader and the wrangler.
Let’s take a deeper look at Lendroid, and what it does for the crypto markets!
Lendroid’s Non-Custodial Margin Trading Protocol
Lendroid is a seemingly safe, independent, open protocol that facilitates a decentralized margin trading system. The protocol is non-partisan, which means that it does not give favor one type of participant over another. The purpose of this system is to create a completely new funding opportunity for investors.
Some Background on Lendroid
Lendroid was founded in 2017 by Vignesh Sundaresan, who is also a co-founder of BitAccess. Sundaresan has development experience with Bitcoin, Ethereum, and Lendroid was created to address the need for global credit in the crypto markets.
The platform focuses on the margin trading market of digital currency. Lendroid’s identity is centered on the crypto markets, and it seeks to join in the crypto margin trading boom. As the crypto markets have evolved, crypto investors are looking for better ways to trade.
- Provides a stability system that is anti-fragile and transparent about risk
- Lendroid supports a wide range of exchanges and is also compatible with numerous exchange protocols.
- Potential to drop the cost of margin funding
- Negotiable fees option and interest rates
- Lending fees can be discussed offline
- The platform provides a new funding ecosystem
- Supply multi-chain operations
- Lendroid network has 2 types of actions – on-chain actions confirm intent / off-chain actions generate intent
Who Can Use Lendroid?
- Core developers – will develop Dapps on the protocol
- ETH-based traders – will use the protocol and infuse liquidity
- Crypto-savvy entrepreneurs – will find and generate businesses opportunities on the protocol
So How Does Lendroid Work?
The Lendroid marketplace allows margin loans to be created and used with a transparent structure that will ensure competitive pricing.
But some questions may come to mind about how the platform works.
- Who will fix a loan’s terms?
- How does a lender know that a borrower has the incentive to pay the loan off?
- What if the borrower decides not to pay the loan back?
There are four main roles in the Lendroid protocol:
- Relayer: Provides off-chain interfaces to interact with the platform as well as manage order books and offer books. The relayer links with the platform behind the scenes. They are compensated in LST deposited by Lenders
- Lender: Lends tokens and sets the conditions of the loan. The Lender is a source of liquidity and their interests are defended by the protocol.
- Borrower: Receives credit by depositing collateral and LST to act as a bounty for Wranglers in the case of liquidation. The mechanics of borrowing are more or less the same – define terms, create loan contracts, execute – with added layers of authenticating the loan and monitoring its health.
- Wrangler: Will keep track of off-chain activities to initiate an auction should collateral fall below the liquidation ratio. A Wrangler can approve a loan request, set margin levels and Monitor loan health.
The Lendroid architecture is built to facilitate a new way for crypto traders to find margin loan liquidity. The project’s margin trading propagation is handled off-chain and the transactions are carried out on its chain.
The Lendroid protocol consist of the following parts:
- Protocol Smart Contracts (Ethereum contracts)
- Lendroid Relayer boilerplate code (reloanr)
- Client-side libraries (lendroid-js)
- Lendroid Wrangler package (pywrangler)
The Lendroid Ecosystem
Lendroid is keen to support the growth of dApps and tokens on the Ethereum platform. It already has more than 5,000 Telegram members 9,000 Twitter followers. As the system gains wider notoriety, it may be able to create an entire ecosystem of token lending for a multi-exchange framework that changes how traders secure funding.
Lendroid – The Rundown
Lendroid is all about creating a cooperative infrastructure and trading environment. In a financial market, how margin loans are sourced is a big part of facilitating not only trading but ensuring that markets have ample liquidity.
Lendroid has created a platform that can help everyone in the margin trading ecosystem to get the most for their money and add liquidity to the market place as a whole. While the platform is still new, it does have some great features.
- A successful Token Generation Event and the introduction of the Lendroid Support Token (LST)in Feb 2018 (capped at 50K ETH)
- One of the initial projects to completely switch to Vyper, with a fully audited smart contracts language.
- The Launch of Reloanr which is potentially a secondary market to a vast range of tokens, a proof-of-concept dApp on the Lendroid Protocol
- Lendroid is on Mainnet from Aug 2019
- Introduced multipurpose support for placing tokens without ERC-20 in 2018.
Lendroid – Pros and Cons
Lendroid has a lot going for it, but like any new idea, the platform will have to work to be a success. Here are some of the things that make Lendroid great, and a few things that could be improved.
- Potential to redefine how margin liquidity is created in crypto markets
- Based on the Ethereum chain and open to further development
- Compatible across a wide range of exchanges
- Lendroid reduces counter-party risks to a large extent
- Gives equal level opportunity for the borrowers and the lenders
- Greater transparency in margin lending operations
- New lending opportunities for crypto holders
- Totally new platform – may need some troubleshooting
- Small existing user base
Lendroid May Create a New Liquidity Environment
Lendroid is taking on an expanding market with a great idea. The company has created a solid architecture that may help both crypto holders and crypto traders to deepen the liquidity pools that make advanced trading strategies work on a larger scale.
If you want to learn more about Lendroid, just click here to visit its website. If the platform is able to successfully attract lending capital, it may be able to become a staple part of the crypto trading environment globally.
The crypto markets are the perfect place for a platform like the one that Lendroid has created, and it may be the start of a new era in crypto trading and investing!