Decentralized P2P Lending Compare: Getline vs ETHLend
Welcome to the first of our article series on comparing decentralized Peer-to-Peer (P2P) lending platforms.
Articles:
- Getline vs ETHLend
Peer-to-Peer lending (P2P lending for short) is a means of financing where people can lend and borrow free from a third party. A platform connects lenders and borrowers, and provides a means for the loans to be conducted and payed back. This can provide easier accessible loans, and open an investment option that was previously less accessible. However, as amazing of a breakthrough as this has been, there is still (sort of) a third party involved — the platform which the lenders and borrowers are using. And this can lead to some problems. For example, all records and identities are kept and maintained by a central party, leaving room for human error and easy manipulation. Furthermore, this can inhibit growth and reach of the platform, as regulations vary so radically from country to country, and even from region to region.
Blockchains, distributed ledgers, which are decentralized — meaning their records are dispersed among many computers within a large network — and the technology they’ve enabled, have brought a huge upgrade to P2P lending platforms. From creating exclusive tokens that help to run the systems, to Smart Contracts that help to automate the process, and decentralization that can add transparency and efficiency, and help the platform to grow and expand.
At this point, you should be fairly familiar with the Getline Network. If not, then I’d invite you to read our writepaper, or our article series on Medium covering the whitepaper in sections. Our information on ETHLend comes from this article by itsblockchain.com.
First of all, we’ll cover SIMILARITIES between the two platforms:
General Similarities:
In general, both of these decentralized platforms aim to decentralize traditional banking, by making financing more easily accessible to everyone. Decentralized P2P lending is a significant disruption in the financial industry. These two platforms (and others like them) can be more agile, faster, cheaper, and even more secure than legacy financial institutions. These two platforms on the blockchain, provide global platforms where lenders and borrowers from around the world can participate with each other, without the need of a third party. These platforms are making banking direct, decentralized, more transparent, inclusive, and accessible to all levels of society.
Specific Similarities:
Both platforms use Ethereum Smart Contracts and ERC20 tokens for automating the loans and running the platforms. ETHLend utilizes Ether and tokenized assets, whereas Getline uses our native token: GET. The loans themselves may be received in different currencies. Both platforms use digital currency as a financial asset and as collateral to obtain loans. Both platforms are simple and user-friendly in their working and interface (mind you we haven’t launched our platform just yet).
Loans on either platform are conducted by the borrower issuing a loan request, a Smart Contract is created with the loan amount, interest rate, time of payback, etc. Then, the borrower must give up some of their digital tokens as collateral for the loan. These tokens are placed in the Smart Contract. Finally, the borrower receives the funds from the loan if it is funded by a lender, and must repay the money within the appointed time. If the borrower fails to repay the loan on time, the Smart Contract will automatically transfer the collateral to the lenders, and further actions may be taken against the defaulter. This automation creates more security for investors. Both platforms also enable multiple lenders to fund the loan, thus sharing and reducing the risks of lending.
The creators of both platforms desire to provide financial access to those with little or no access to banks. And since they’re Peer-to-Peer and decentralized on the blockchain, and transactions happen directly between parties, neither platform ever holds anyone else’s assets, which helps make banking quick as well.
Both platforms provide a high level of transparency, since all transactions on them are open and can be seen on block-explorers. This also makes it easier to see what’s happening with a particular loan. Both also provide security to lenders, as the lenders can choose which borrowers they want to fund, based on their credit history. Whereas in traditional banking, the institution takes the borrower’s money, and then lends it to either a reliable or even potentially an unreliable borrower.
Another similarity is that there are no interest rate differences between countries. The interest rate for each loan is decided by the people involved, and not by a bank.
Secondly, let’s take a look at the DIFFERENCES between Getline and ETHLend:
ETHLend Differences From The Getline Network:
ETHLend has a number of differences from Getline. For example, it provides the opportunity for the tokenization of physical assets, such as land records, which can then be used as collateral. Banks and financial institutions can also become liquidity providers with the platform through a provided open API. The platform also gives individual sovereignty with their uPort, which gives “self-sovereign identity-based lending” as a way for lenders to make higher profits through unsecured loans. To improve security, and to provide a way for loans to be collateralized 100%, ETHLend uses Ethereum Name Service Domains (.eth) as alternative forms of collateral. And lastly, itsblockchain.com, says that:
“Ethlend will also be building cross chain platform solutions through interoperability between different blockchains and aim to provide a benchmark for universal credit ratings through credit tokens.”
Getline differences from ETHLend:
First of all, we haven’t launched the Getline Network yet, so we have the advantage of hindsight, and will be taking in community feedback as we develop the platform. One of the biggest differences with the Getline Network is that Getline will employ Attestors of Risk Analysis (ARAs). These ARAs will create a sort of credit risk prediction market. Their function is to give a default rate score to potential borrowers, which will help lenders know if they want to invest in their loan or not. The ARAs also help to insure that the Getline Network is not only available worldwide, but also compliant with regional lending regulations, and thus less likely to have issues with governments. In the Getline Network, the lowest bidders willing to comply with the borrower’s loan request, will get to fund the loan. Our team has put much thought into the system, to insure that all parties are held responsible, and have “skin in the game”, including our ARAs, so any form of fraud is largely avoided. We’re also partnering with digital identity providers, so that those with no identities can get a legally recognized one, and start their journey of building a credit score.
One of the most important differences between the two platforms is the tokens used. In the Getline Network, we will be utilizing only our native GET tokens for network fees and collateral. This is expected to cause the token to rise in value over time. While ETHLend also has their own token, they also allow for the use of other assets for such tasks. Although more flexible, this will likely not have the same pressure on their native token to rise in value.
All accounts taken in, both the Getline Network and ETHLend are cutting edge decentralized peer-to-peer lending platforms. Keep an eye out for future developments of both.
We hope you enjoyed this article.
The Getline Network team.
Disclaimer: The above information may or may not be entirely accurate. There may be features in the differences sections that apply for the other platform as well, that we were not aware of.
