LendSafe

Inspiration

Big Banks have a lot of cash but are not able to leverage on DeFi lending protocols due to the nature of the KYC/AML compliance which directly goes against what DeFi is supposed to stand for (decentralisation and anonymity). And because of this, the banks are stuck to their old manual processes of handling loans, underwriting, debt collection, contract law, legal enforcement, etc. DeFi does have the power to make this lending/borrowing protocol more efficient, safe and accessible but it lacks the compliance aspect, which is what is driving the big players like banks and businesses (as borrowers) from leveraging this web3 technology to improve their processes. Hence, I wanted to create a compliant solution for institutions that blends the good aspects of DeFi like speed, transparency and immutability, while also keeping the secure aspect of TradFi like compliance, regulations and governance. This idea of blending DeFi and TradFi has become very popular in recent years after the crypto hype died down. Many banks are adopting Distributed Ledger Technology in many aspects like RWA, securities, bonds, etc. due to its efficiency and immutability. This is why I wanted to build a solution that better emulates real world scenarios rather than optimistic fantasies of crypto.

Additionally, from a borrower perspective and as a business, over-collateralising for a loan is not ideal in any situation which also deters real world businesses from taking part in DeFi lending protocols

What it does

LendSafe is an Institutional Grade KYC Compliant Lending Protocol for Banks to optimize their lending processes through atomic automation via the blockchain. LendSafe was built with banks in mind to provide these institutions with more security and less risk (at the cost of decentralisation).

At the heart of the project is the vault manager which stores all the XRP and manages borrower profiles and is in charge of maintaining pool liquidity health. The platform also has the ability to clawback the XRP-backed tokens issued as part of the loan payment from the borrower. This is to recover funds when companies are discovered to be suspicious or involved in fraudulent activity. With this feature, we can minimize losses and prevent these bad actors from escaping. Additionally, due to the KYC checks, the platform has the legal documents of the borrower in a well formatted manner which we can take to authorities for further action which can greatly affect the company's reputation. The vault manager will be able to inspect profiles and also get alerts when suspicious activity is detected on chain by borrowers.

as a borrower, you will need to provide legal documents and information in exchange for a DID which verifies you and allows your wallet to be able to make loans in the platform within seconds, no collateral required. from there, the borrower will have to pay back the loan plus interest over the course of a set amount of time. If you do not have the credential, you will not be able to make loans on the protocol as LendSafe adheres to strict KYC standards to ensure borrowers can be trusted. Collateral is no longer required as we have programmed the money to have a failsafe and return to the vault on valid reasons, thus we are able to mitigate credit risk and no longer need collateral as a failsafe

as a lender, this protocol helps to offload the risk and legal aspects for the lenders and allow them to earn interest from lending money as our platform will handle KYC checks and clawbacks to ensure fund security and allow lenders to gain yield. this protocol is meant to target big banks and high net worth individuals who require KYC compliance and security. on the platform, the lenders will be able to see the current borrower info as well as the current loans from the pool. Lenders will be able to see the status flags and the risk parameters of the borrowers as they are available on chain. Lenders will be able to withdraw in XRP.

How we built it

xrpl.js next.js gemwallet

Challenges we ran into

Accomplishments that we're proud of

What we learned

What's next for LendSafe

Stablecoin integration RWA integration

Built With

• next.js