Frequently Asked Questions

What is Lendoit?

Lendoit is a decentralized P2P Lending platform, which connects borrowers and lenders from around the world using the advantages of Ethereum Smart Contracts and the Blockchain technology.

The platform provides all the elements a lending market needs to function, namely: professional scoring and verification APIs for each country, a loan marketplace, where lenders bid interest rates on loan applications and a default market where failed loans can be traded. The Lendoit Smart Loan Contract also offers important functions like syndicated loans and the ability to sell a loan to another lender if needed.

What are Lendoit's vision and its goals?

Lendoit’s goal is to establish a fair and decentralized lending alternative for the banking system and to enable lenders to lend funds with minimal risk and high reward and on the other hand allow borrowers better rates. This will help people around the world and be their gateway to the Blockchain and Cryptocurrency realm.

What happens when a borrower does not pay back the loan?

If a borrower fails to pay back the loan completely, the loan turns into a default. In this case the Lendoit Smart Compensation Fund immediately deposits a fraction of the loan to the lender in order to minimize his loss. Since the borrower is known and legally bound to the smart contract, the lender has the choice of collecting the debt himself or simply selling the default on the Collectors Market to further minimize his loss.

*The ability to engage in syndicated loans protects the lender as well

What is a syndicated loan?

A syndicated loan means that several lenders give the total loan amount. This way lenders can minimize their risk by distributing their capital on different loans instead of "betting on one horse" and the borrowers have better chances of getting their loan applications filled.

What is a collector and what is the collectors market?

Collectors or "Debt-Collectors" are companies that take legal measures against “bad” borrowers in order to collect the debt. In each country, the legal framework is different, hence, collectors act differently depending on the borrower’s country of residence. On the Lendoit platform collectors from all over the world will be able to buy failed loans for a small price and profit by recovering the loan.

The collectors market is a separate marketplace on the Lendoit platform where loan defaults are traded between lenders and collectors. Default trading is an important component and a very common factor of traditional lending markets.

How can Lendoit protect its Lenders?

Lending is a risky business, however Lendoit makes sure to address the lender’s risk:

First: every borrower is scored through a professional scoring/verification processes by third party companies in the borrower’s country (before their loan application is published)
Second: the lender is protected through a Smart Compensation Fund where a percentage of every loan is stored in order to compensate for the defaulted ones.
Third: in case of default the debt can be sold in a collector’s market (default market) - the lender can sell the debt to professional collectors in each country (similar to the way it works in the traditional markets)
Four: The ability to engage in syndicated loans protects the lender as well.

By combining the four Lendoit mitigates the chances that lenders are affected by the risks of lending.

What is the LOAN token good for?

The LOAN token has 3 functions:

  1. The interest the lender gets when the borrower pays back the loan is given in LOAN tokens.
  2. The lender must hold a certain amount of LOAN token in order to be able to lend money on the platform
  3. Fees to the LENDOIT platform will be paid in LOAN token.

The Smart Conversion Contract takes care of converting any cryptocurrency into LOAN tokens and vice versa. The use of LOAN tokens guarantees the proper functioning of the platform while incentivizing and rewarding all participants in the marketplace.

What is Lendoit’s main advantage over its competitors?
  • Many projects try to create P2P lending platforms on the Blockchain, and this is a sign of where the market is going, but most of the projects apply faulty implementing approaches. Our approach is unique and different and unlike others, Lendoit is the only platform which does NOT take collaterals. In the world of micro loans, managing collaterals is not sensible - it’s like lending $USD by using €EUR as collateral. Lending consists of putting an illiquid asset as collateral to get a liquid asset, which applies for BIG loans (something that the platform will offer later on).
  • Lendoit platform combine 4 different efficient and unique methods to mitigate the chances of our lenders to lose their money:

    • 3rd party professional scoring/verification local companies
    • Smart Compensation Fund
    • Collectors Market where default debts can be sold
    • Syndicated Loans.
What is P2P-lending?

P2P-lending is a form of lending where the trusted third party (typically a bank) is cut out of the equation, allowing people to directly engage in credit agreements. P2P-lending emerged with the internet in the early years of this millennium and has experienced immense growth ever since. Practicability and better interest rates than traditional loans make P2P-lending an attractive form of financing for people both in developing countries and in the industrialized world.

What is the difference between Lendoit and a P2P loan?

Up until now, It was not possible to get a loan or lend across borders, but using Lendoit you can! Using the blockchain technology someone in Brazil (which has a 50% and more interest rate) can get a loan from someone in Japan (which has a 1% interest rate) with a smart contract tender, which will set the best interest rate both for the borrower and the lender.

Other blockchain P2P lending platforms on the blockchain are missing the point because they require collateral in other coins or tokens - but if you already have other coins or tokens you can sell them and you don’t really need a loan. Lendoit is the only real P2P loan decentralized company which offers a free market for borrowers and lenders around the world.

How can I become a borrower?
  1. Get verified and get Scored – In order to become a borrower, you must be verified and scored first, therefore, the platform has APIs prepared that connect you to your country’s most professional and well-known verification and scoring companies.
  2. Fill out a loan application – once you are verified and scored you can fill out a loan application that fits your needs. A personalized smart contract is created and it includes all important information and respects your country’s legal framework concerning lending businesses.
  3. Ask for a loan - The smart contract is posted in the Lendoit marketplace where lenders from all over the world bid interest rates on your loan - guaranteeing you, as a borrower - the lowest interest rate possible.
How can I become a lender?
  1. Choose a loan contact from the Lendoit Marketplace
  2. Transfer the fund to the Smart Loan Contract and participate in the interest auction.
  3. All required information regarding the status of the loan you gave is presented transparently on the platform at any given moment.
What is a secondary market?

The secondary market is the market where previously issued loans are traded among lenders. If a lender suddenly wants to get back his money before the due date, he can sell the loan he gave to different lender.

What about the volatility of Cryptocurrencies?

Young and small markets tend to be more volatile than big and established markets. The market for Cryptocurrencies is still young and comparably small - therefore the high grade of volatility. We foresee the cryptocurrency market will keep on growing significantly in the long run which means that coins and tokens will be more stable in terms of price fluctuation. But we don’t have to wait for that to happen in order to run a functioning platform - if a borrower is afraid of borrowing Ether because the price might skyrocket before he is able to pay the loan back, he can choose s fiat-pegged token like Tether to execute the loan.

What is a Smart Loan Contract?

The Lendoit Smart Loan Contract saves all the important data about the borrower and the loan specifications.

After being posted on the market and being filled by one or various lenders the Smart Contract executes and deposits the money to the borrower’s wallet. When the first payment is due, the Smart Contract automatically notifies the borrower and recognizes if the borrower successfully pays back the loan.
In response to the borrower’s payment discipline the Lendoit Smart Loan Contract communicates with the Lendoit Smart Reputation Contract and actualizes the borrowers credit score.
Depending on the loan currency the Lendoit Smart Loan Contract in cooperation with the Smart Conversation Contract converts the defined amounts necessary to pay platform fees and deposit into the Lendoit Smart Conversation Fund.

What is a Smart Compensation Fund?

The Lendoit Smart Compensation Fund is a type of smart contract that receives a small fraction of all loans executed on the platform. Although the Lendoit platform is designed to keep the community as clean as possible from "bad apples", loan default is inevitable. So, every lender that suffers a loss on a loan receives a fraction of the loan immediately when the loan is classified as a default, to minimize his loss. Hence, the Lendoit smart compensation fund functions a bit like an insurance every lender has on every loan he is involved in.

How much interest will the borrower pay?

Every loan application of an approved and scored borrower will be visible on the Lendoit Marketplace, where the lenders can bid the amount and interest they are willing to give for each specific loan. This way the borrower is guaranteed to get the smallest interest rate possible. Lendoit does NOT issue any loans! We are building a platform to bring borrowers and lenders together, worldwide

How can the borrower "cash out" the loan?

Generally, we believe that cryptocurrencies are the future and in the near future it will not be necessary to convert into another currency in order to realize purchases. However, the borrower can receive the funds in a wallet he chooses, which can be a wallet related to a credit-card that allows instant fiat-spending (I.e.: TenX and similar). We are also working on a direct implementation of multiple cryptocurrencies and wallets to facilitate the conversion of the loan into fiat.

How does Lendoit handle too many crypto-currencies on the platform?

This is exactly where the LOAN-token steps in. It will convert ETH and ERC-20 tokens instantly without bothering the user. And since it is a smart-token it can convert non-ETH crypto currencies smoothly. This way we guarantee maximum usability and a pleasant user experience of the platform while creating an economic ecosystem.