Blockchain startup ETHLend introduces working capital finance for Initial Coin Offerings
Fund raising in crypto economy is about to have a new chapter. ETHLend launched recently decentralized lending on Ethereum Blockchain Network. The decentralized application (DAPP) is accessible with the use of MetaMask. ETHLend started with secured lending by allowing borrowers to pledge ERC-20 compatible tokens as a collateral. Since then, ETHLend has introduced the ability to pledge Ethereum Name Service (ENS) domains as a collateral.I think I'd be more comfortable entering into a tontine with a bunch of homicidal cannibals.
All transactions are performed on smart contract, which holds the collateral until the loans is paid back. In case the borrower does not pay the loan back, the collateral is transferred to the lender, who can sell or auction the collateral to regain any losses.
Initial Coin Offerings require working capital. Blockchain startups that have chosen the ICO-path find often that ICOs require resources such as marketing, PR, development, security efforts, translations and client service. Such efforts require working capital that some blockchain startups might not have.
The use of smart contracts and ERC-20 compatible tokens might introduce a new decentralized way to receive working capital for Initial Coin Offerings (ICO) or pre-sales of ICOs. Since most of the blockchain startups allocate part of token total supply to the venture itself or to developers’ fund. Some of these tokens could be used to attract working capital for the ICO preparations by pledging the tokens to get a loan and paying the loan back once the ICO is over and funds have been raised.
For example, the blockchain startup could pledge tokens as a collateral that covers 150% of the borrowed Ether (ETH) value. If the startup plans to sell 5 000 tokens for 1 ETH in ICO, the startup would pledge 7 500 tokens for every ETH that they borrow and provide an attractive interest rate such from 5-10%....MORE