The peer-to-peer lending industry in the last few years has experienced rapid growth. Between the time period of 2018-2019, the P2P lending industry developed by over 17%. Moreover, during 2020, it was anticipated to reach billions of dollars. Such figures apparently highlight that the peer-to-peer lending industry will proceed to develop further. On the other hand, the peer-to-peer lending sector happens to be experiencing phenomenon development. It is also undergoing a fintech revolution.
They can be referred to as the revolution brought in by the infusion of blockchain. It is as it is assisting in establishing a loan marketplace where one can become a borrower or a lender. Backed by smart contracts, a peer-to-peer cryptocurrency lending exchange happens to be more transparent and secure than the conventional peer-to-peer lending exchanges.
The peer-to-peer lending industry assures maximum potential in the upcoming years. But, the development happens to be pulled back by the inefficient infrastructure and the mediators. The following tips highlight the role of blockchain in peer-to-peer lending and how it is growing rapidly because of the advantages.
A peer-to-peer cryptocurrency lending software as yours that the landing platform happens to be built in such a way that it comes with all the above-mentioned characteristics. Apart from that, a peer-to-peer Crypto lending platform also needs to follow particular landing procedure models. Go to the steps below to understand better.
Step 1: The Lender Has to Create a Profile
To begin with, a peer-to-peer cryptocurrency lending exchange must develop a liquidity pool. It needs lenders to develop a profile for that and then put in the liquidity. To build an account, the lender will need to divert the following details:
After the profile creation is complete, is likely to be approved and submitted on the marketplace. Here, the borrowers can find the lender. Moreover, in the marketplace, the lender will need to wait for receiving a request from the borrowers.
Step 2: The Borrower Has to Create a Profile
In this step, a borrower is also required to develop an account on the peer-to-peer crypto lending software. The borrower will also need to give the same details as the lender. Apart from that, he is required to mention the cryptocurrency assets that he is looking forward to depositing as collateral. Moreover, a third-party guarantor is needed on his part. After the acceptance of his profile by the platform, a borrower can begin looking for lenders.
Step 3: Developing a Smart Contract
The next step in the lending procedure is triggered while a borrower sends a request for a loan to the lender. For sending a request, a borrower required to utilize a smart contract for connecting with the lender, thereby leading to the development of a smart contract.
Step 4: The Borrower is Interviewed By the Lender
After receiving the smart contract from the borrower, the lender interviews the borrower. The lender would ask questions about why the borrower is looking forward to a loan, has opted for a cryptocurrency loan previously or not, along with the rate of interest he is likely to pay.
Step 5: Application Approval
After the approval of the loan application, the interest rate is automatically fixed by the smart contract. It is also based on the credit history of the borrowers on the platform.
Step 6: Loan is Given
After the lender and the borrower agree with the terms and conditions of the smart contract, the amount of the loan is given to the borrower, which is also known as direct wallet transfer.
Step 7: Repayments of Loan
The loan repayment dates are programmed by the smart contract. In case the borrower fails to take care of the timely repayment, the smart contract automatically combines late fees to the amount of the repayment. While making payments in the future, the late charge amount is deducted from the wallet of the borrower. In case of payment failure on the part of the borrower, the lender gets paid automatically out of the collateral given by the borrower.
Peer-to-peer cryptocurrency lending comes with incredibly transparent options when it is compared to conventional peer-to-peer lending. Thanks to the transparency and security offered by the technology of blockchain, the procedure of lending and borrowing is a pretty efficient process now.