How to Proceed with P2P Crypto Lending Platform Development
By Antier Solutions 🛡️ on The Capital
The cryptocurrency market has created a remarkable presence in the financial world. The conventional loan market driven by traditional bankers is gradually shifting to cryptocurrencies for the lending process. The opportunity created by crypto-backed loans is endless and businesses are capitalizing on this opportunity by partnering with P2P crypto lending platform development companies.
P2P lending platforms do not lend their funds but instead act as a platform or intermediary wherein borrows and lenders meet to match their interests.
Now you may be considering how the platform owners will earn revenue despite not placing any funds in the platform. And the answer comes in the form of fees. The platform owner generates his revenue from fees charged to platform users. This platform enables peers to come together to a common platform and connect to finalize the transaction.
How crypto assets are disrupting P2P lending
Cryptocurrencies are disrupting the P2P lending paradigm. With cryptocurrencies, the whole framework has become easier and flexible to follow. The convenient payment mechanism is a major plus point for attracting lenders and borrowers to opt for crypto-based P2P lending platforms.
The use of cryptocurrencies enables more security and reliability of transactions as these currencies are based on Blockchain technology that promotes trust and transparency. A P2P lending platform is reinforced with smart contracts that automate the required processes.
How to start a P2P crypto lending business
P2P crypto marketplace is growing day-by-day. Many businesses are availing P2P crypto lending platform development services to build their lending platforms to create a new revenue generation model. The banking industry will be completely revolutionized with the impact of crypto lending platforms. Let us explore what it takes to start your p2p crypto lending platform.
- Loan Products: This is the very first step where you will define the loan products that your platform will be offering. You need to be clear about the currency that you will use to give the loan and which currency will be used as collateral. The workflow of your platform needs to be devised carefully before actually starting a lending platform.
- Technology Platform: For developing your P2P lending platform, you can choose between two options — to develop it from scratch or go with a white label product. The choice you make will determine the development cost and time-to-market of your product. Building your P2P lending from scratch will require more development time and cost as compared to developing a white label P2P lending platform.
- Collateral Process: An efficient collateral mechanism needs to be in place for efficient risk assessment. Efficient LVR (Loan to Value Ratio) needs to be formulated and designed. For example, a business model works on 50% LVR ration, signifying that whatever will be the total amount of crypto assets, out of that 50% will be rendered to the borrower as a loan amount. This makes the whole process go smoothly and efficiently.
- Borrower: A successful lending platform is the one which attracts a large number of borrowers and lenders to their platform. For creating a strong platform, you need to market your platform to make your target audience aware of your presence. You can choose SEO, direct mailing and also social media to create a buzz in the market.
- Lenders: Lenders are attracted to a platform that offers good returns and an option of investment diversification. So, you should carefully devise the workflow of your lending platform to cover all the valuable points.
- Regulations: The regulatory framework of P2P crypto is fragmented as some countries have set clear rules to license the platforms and some are still wandering in their thoughts. There exists no global implementation rule. In the USA, the lending platform is regulated by state-level for non-banks and FinTech companies, and in the UK, lending platforms need to be complied and obtain licensing from FCA.
P2P crypto lending has a great potential to revolutionize the lending market. If you are considering developing your own lending platform, Antier can help.
We offer customized P2P crypto lending platform development services to cater to diverse business needs. Additionally, we offer a white-label P2P lending platform fortified with industry-leading features like bank-grade Admin panel, smart contract-driven escrow system, LVR calculation, auto-renewal of loans, refinance, multi-layer security, and more.
Schedule a free demo of our white label lending platform or connect with our subject matter experts to share your needs for a custom P2P lending platform.