Unpacking the Benchmark Protocol P2P Marketplace
The ability to use a blockchain rather than a centralized intermediary to facilitate a P2P loan saves users time and money. Although a centralized approach to data collection and storage as it pertains to lending still dominates the world of finance today, we believe it won’t last long. The upcoming Benchmark Protocol P2P Marketplace will introduce a user-friendly, robust, and wide reaching multichain solution for decentralized finance. Contracts in the Marketplace can be powered by the MARK token because MARK is designed to serve as a stable form of collateral. Additionally, separate and all-new governance functions will be implemented that will create a financial ecosystem equipped to stand the test of time.
The Paypers, a respected financial technology publication, forecasts that Business P2P lending loan values will reach $290 billion by 2023.
Recap
The Benchmark Protocol Marketplace aims to facilitate a fully permissionless multi-chain lender-driven exchange for loan offerings. This will include any ERC-20 token lending/borrowing at launch. Borrowers are able to choose from a competitive array of different loan structures and receive a loan proportional to their provided collateral. A single loan offering can serve many different borrowers, as long as the created Marketplace contract holds enough tokens to provide the loan.
A borrower chooses their desired loan offering and receives the loan in exchange for the requested collateral. The loan can be paid off at any time. There is no compounding interest; the payoff amount is defined on loan creation and is static. If the borrower fails to repay the loan before the loan duration has ended, the collateral is released to the lender. In this way, the lender mitigates their risk by adjusting the conditions of their loan offering (collateral, loan duration, interest), while being in direct competition with other lenders. The Marketplace is a separate and closed network where no external input is needed. This adds to the fundamental security and robustness of the platform. All processes are entirely permissionless and all assets are locked in an audited smart contract.
With ease of use and simplicity in mind, governance is also a top priority. We have extensively modeled different strategies and have narrowed it down to a solution we believe the community will appreciate and actively engage with. Furthermore, the proposed governance initiative will add additional utility to the Benchmark Protocol Ecosystem and will allow the MARK token to remain purely as a unit of account. It is worth noting that the recent teaser for “BETA” is not involved in the aforementioned governance solution. This is important as we expect MARK token adoption as collateral to increase given its unique design.
At a Glance
- Users can select which asset they would like to borrow
- Users can select which asset they would like to lend
- Users can select their preferred form of collateral
- Users can set pay-off terms (Fixed Interest Rate)
- Users can set their own time frame for the loan duration
Marketplace User-flow
Users visit the Marketplace where lenders offer their collateral with various requirements in payoff amount, terms, and collateral types
Lenders are free to create a loan offering that can serve many different borrowers, as long as the lender-created Marketplace contract holds enough tokens to provide the loan.
Users can see and manage the collateral requirements on all their outstanding lends and borrows from one easy to user interface
Users are able to modify their current collateral requirements and make adjustments based on their risk tolerance
Whitelisted vs Non-Whitelisted
There will be two sections in the UI:
a) a whitelisted section for projects supported by Benchmark Protocol — their rates/terms will be aligned to a general framework
b) an open section where anyone can offer loans with their desired terms — no restrictions
Possible Strategies (Not Investment Advice)
- If you own an asset (any ERC-20 token) that you believe will appreciate but do not want to sell, you can utilize it’s value to buy (gain exposure to) a new token by lending your primary asset.
- Bear Market Strategy — Generate yield on the assets you want to hold without the risk of impermanent loss by lending them out.
- Bull Market Strategy — Use your assets as collateral to borrow assets you believe will appreciate and pay back the loan with your profits
- Diversification — Lend your assets, stake your assets, and farm with your assets all at the same time.
- Leverage — Use your assets to borrow more assets that can be used as collateral in a leveraged trade.
How does MARK play a role in the Marketplace?
As you know, MARK is the stablecoin alternative that is designed to be used as collateral within DeFi. Elastic supply “rebasing” tokens are the perfect form of collateral for P2P loans. MARK will, as always, be subject to rebase even within its operations inside the Marketplace. This actually creates a favorable environment for both lenders and borrowers utilizing the MARK token in their positions. Volatility is offset very quickly due to the supply changes (Rebase) and so repayments remain stable and the fixed ownership of the MARK network remains the same (non-dilutive).
The Tech Stack
The implementation of The Graph into the tech stack has delayed the launch slightly. However, this implementation comes with many benefits. The Graph already supports a multitude of EVM compatible chains which make our “multi-chain” connections deploy much quicker. Additionally, The Graph allows for many (1000’s-100,000’s) P2P requests to be sorted without delay, a must for scalability. Last but not least, the Implementation of The Graph signals our intention to Decentralize the governance of the Marketplace and Benchmark Ecosystem overall.
About Benchmark Protocol
Benchmark Protocol mitigates liquidation events and hedges risk with the MARK token; a supply elastic, stablecoin-alternative that connects traditional capital markets to DeFi. The protocol operates as a rules-based utility that dynamically adjusts supply based on the CBOE volatility index (VXX) and deviations from the target metric — equal to 1 Special Drawing Rights (SDR) unit. Employing the SDR creates a larger use case rather than exposure to just one currency; the application of this creates a larger user base and delineated exposure to markets around the world. The DeFi space needs a collateral utility that retains its efficacy and increases inherent, baseline liquidity during periods of high volatility.
Benchmark is built on the Ethereum blockchain. The MARK token is the native asset in the Benchmark network and provides only the utility value available to it through the Benchmark network.
