Together with Bitcoin price growth over $10K these months – the interest in the cryptocurrencies topic has returned to the masses. Again, activity has started in various areas of blockchain technology, and the crypto lending market is not an exception.
Some of the startups are using cryptocurrencies as a deposit for issuing loans in fiat. Others are not related to cryptocurrencies at all, and they only use blockchain to create their credit bureau to change the traditional lending market.
Below you’ll find five startups from the crypto lending area that are worth paying attention in 2019. How I have chosen the following projects, you can check out in the article footer.
Poland-based startup Marshal Lion Group presents itself as a non-bank lending market. The startup develops a blockchain platform that will allow ordinary investors to earn money on lending to various economy sectors – from the private business sector to the public sector, including government institutions.
The Marshal Lion Group team consists of professionals in the capital market and has partnerships with both the Polish Blockchain Chamber and other international organizations. Currently, the project is on Pre Sale stage, allowing investors to contribute to the startups with a 30% discount.
It could be a disadvantage of the project, that the was no core platform release. Still, it is planned for September 2019. Moreover, Marshal Lion Group have a business track record. According to Whitepaper, the project reportedly had first revenue already in place in 2016.
This service allows borrowing money in traditional currency (fiat), leaving cryptocurrency as a deposit. Bitcoin, Litecoin, ZCash, Ethereum, Monero, and other well-known cryptocurrencies are accepted as deposits.
Reportedly, the project has received applications for loans secured by cryptocurrency for a total value of more than $1 billion. At the same time, the project is ready to issue loans in fiat in the amount of $1K to $2 million.
Still, there are some reports on TrustPilot Nexo page about disadvantages of the crypto lending platform. One user states that deposit of withdrawals take too long and crypto doesn’t appear on the account, while explorer shows money already comes.
American startup Spring Labs does not think about working with cryptocurrencies. The company is working to create a blockchain-based credit bureau. In the U.S., this market is monopolized by companies such as Equifax and Experian. In recent years, they have had various security scandals.
Besides, ever fewer banks provide credit bureaus with complete information about borrowers, because the system designed in a way that the information is transmitted to the bureau for free, and then it comes out for money. Spring Labs creates its credit bureau, which solves these problems with the help of blockchain.
The advantage of the project is a big names behind it – General Motors, for example, participated in one of the funding rounds. The disadvantage of the project is that despite it has founded in 2017 and was heavily founded – no working product with the target for the real market consumers have been released.
ETHLend is an Estonia-based blockchain startup that aims to leverage Ethereum smart contracts to create a decentralized, transparent, and secure peer-to-peer lending environment. The company has created a platform that allows individuals to issue loans or borrow from other individuals.
The company says that “the lending market is not controlled by politics, monetary policies or by banks. Instead, people control the terms of finance”. The disadvantage of the ETHLend startup is a limited currency – only Ethereum.
While there are different users reviews on the ETHLend service (bad ones and good ones), it seems alarming to hear bad reviews about the projects and its founders made by its employees. On Reddit, you can find the thread with the details on it, while still the issue was reportedly resolved.
The BlockFi startup business model is a bit similar to some of the projects mentioned above. However, it’s distinguishing feature is that the startup was launched and operates in the United States and following the local law. BlockFi offers to temporarily take on your crypto portfolio in exchange for fiat currency.
BlockFi is a secured non-bank lender that holds onto your crypto assets until the loan is repaid. In August, this startup has raised $18 million from the venture investors pool. This is definitely an advantage of BlockFi, because new funding can help the startup to grow further and to discover new markets.
The disadvantage of the startup could be in the inconsistency of management’s decisions. At the beginning of March, BlockFi launched a new service offering to pay clients 6% monthly interest on their crypto. But at the end of the March founders changed their mind and agreed to pay 6% only for deposits up to 25 BTC; otherwise, the percent slashed three times. The community didn’t welcome the decision.
This rating was compiled based on the following methodology. First, I googled for keywords such as “crypto lending startup,” “top lending services cryptocurrencies,” and so on. The output was a short list of about 12 project sites. After that, I checked whether the project site is working and whether there is any development. While I’m not a professional researcher, I hope this methodology helped to make an accurate list of lending crypto startups as of August 2019.