The Cross-chain Loans Mainnet Beta is Live!
The Cross-chain Loans Protocol is a non-custodial, trustless, decentralized, and multi-chain system of smart contracts that enables the creation of debt agreements with assets on different blockchains.
Motivation
Loans are a primitive financial instrument, however, there are currently no non-custodial, trustless, and decentralized solutions that allow DeFi ecosystem participants to lend, or borrow, assets through different blockchains without an intermediary, without giving up custody of their assets or without having to trust a central entity.
On the one hand, current DeFi protocols that allow users to lend and borrow assets only operate on a particular blockchain, and it is impossible for them, without introducing centralized elements, to communicate and interoperate with tokens and assets issued on external blockchains.
On the other hand, there are centralized cryptocurrency lending platforms that allow their users to lend and borrow tokens from different blockchains. This is possible since these platforms act as “trusted” intermediaries between the parties involved; however, users are forced to give up full custody of their assets or private keys to use them. This represents an inherent risk for users, as these centralized platforms can be hacked, can steal or confiscate their users’ funds.
Given the above, and the lack of trustless cross-chain solutions that enable interoperability between native tokens of different blockchains, the Cross-chain Loans Protocol was born with the aim of offering a decentralized solution to enable the creation of debt instruments with native assets located on different blockchains without giving up custody and without having to trust an entity or group of entities that could be hacked or that could steal user funds.
Introducing The Cross-chain Loans Protocol
The Cross-chain Loans Protocol is the first decentralized lending marketplace that allows the creation of debt instruments with native tokens across EVM compatible blockchains, without the need for bridges, centralized oracles, or minting wrapped tokens; based on the EIP-1850 proposed by Matthew Black and Tony Cai.
The protocol implements Hashed Time-Locked Contracts (HTLCs) and extends the concept of Atomic Swaps for the creation of debt and repayment between different actors, using hashes and preimages to represent various actions during the loan process, and thus allow interoperability between different blockchains in a decentralized, trustless and non-custodial way, and without having to mint wrapped copies of the original tokens.
Likewise, Chainlink is implemented as an oracle to obtain the value of the assets used as collateral, and thus allow smart contracts to calculate the amount of the corresponding collateral that must be distributed to the parties involved, in case of non-payment by the borrower of the loan; thus protecting both parties from the volatility of market prices.
The system works as a decentralized marketplace where lenders and borrowers can meet to create collateralized loans, without having to trust each other o having to trust a centralized entity or escrow. To achieve this, the protocol requires users to reveal preimages that are used as proof that a certain action was performed in an external blockchain.
Once the loan is set up both the lender and the borrower are protected against front-running or malicious actions from third-party actors. When the borrower fails to pay back the loan, the lender can seize part of the borrower’s collateral to make him whole again. On the other hand, when the borrower pays back the loan, the funds are not released until the lender reveals the preimage, or key, to unlock the collateral.
The Harmony-Ethereum mainnet beta
Since the release of the alpha version of the protocol between the Harmony and Ethereum testnets in August last year, we have received valuable feedback from early users that allowed us to implement improvements and correct bugs in the smart contracts used in the protocol; as well as improving the user experience in the web and mobile interfaces.
Today we are excited to present the mainnet beta release between Ethereum and Harmony. This version -or Minimum Viable Product- represents a first iteration of the protocol that allows users to lend stablecoins from the Ethereum blockchain, using the native Harmony (ONE) token as collateral.
This way, Harmony token holders will be able to obtain liquidity in the form of Ethereum stablecoins, without having to sell their tokens. On the other hand, lenders will be able to exchange the time-value of their stablecoins to earn yield.
What is new?
Since the protocol requires 2 actors to interact with the smart contracts and reveal preimages to prove that a certain action was performed, during some steps, one actor must wait for the other party to perform certain actions within a given time frame before continuing with the loan process. For example, when the borrower locks his collateral, he must wait for the lender to approve the loan before being able to withdraw the loan’s principal.
Given the above, and to improve the user experience, in this version we implemented an email notification system that detects when the state of the loan updates or when an actor performs any actions. This way, both the borrower and the lender are notified of important events and informed of the required actions they must perform.
The website and email notification service work as an aggregation and matching layer that allows the parties involved to easily interact with the smart contracts without introducing elements of centralization or trust.
What do I need to start using the web version of the Cross-chain Loans protocol?
To start using the web interface of the Cross-chain loans protocol you will need to download and set up the following wallets:
Once you have installed and configured both wallets, go to crosschain.loans to start lending or borrowing tokens across blockchains.
If there are any questions about any of the requirements or steps to lend or borrow, please reach out to us on Telegram.
