We created Loan Wolf, in order to build infrastructure for decentralized custom-collateralized lending. Currently in DeFi, in order to borrow on Aave or Compound, borrowers must lock at least 2x higher collateral than loan amount. Also, most of the collateral requirements are restricted to accepting ERC-20 tokens.
What it does
With zero Solidity knowledge, lenders create loan products that are configured by parameters like payment token type, duration, amount, APR, collateral token, collateral amount, liquidation parameters and required borrowers’ data for scoring. Interest rate is fully customizable and opens up options for variable interest loans. Possibility to issue wrapped token loans opens nearly 2T USD liquidity market!
Borrowers select a loan product, fill in borrowers’ application and mint debt obligation (bond) ERC1155 token. Chainlink is used to pass Merkle Tree of hashed borrowers’ data to the blockchain for anonymous verification by independent lender validators. In the future, Chainlink infrastructure will also be used for decentralised credit scoring and validation.
After loan application has been approved, borrowers can sell debt tokens to the lenders, and raise capital. With Loan Wolf, lenders can buy out even a part of or a fraction of a loan! Bonds can be resold partially or fully at the secondary market to other investors. Lenders must stake tokens for interest accrual. Upon repaying principal and interest of the loan, bond ERC1155 tokens are burned.
Loan Wolf contracts provide infinite customization and modularity since each loan agreement is a separate entity of a smart contract. How about borrowing against your tokenized real estate, collectibles, or future subscription fees or even against another bond you own? You can do that with Loan Wolf.
How we built it
LoanWolf is built on NodeJS web server, Angular frontend and can be tested on Ethereum Kovan network. Merkletree.js is used to verify borrowers data anonymously.
Challenges we ran into
Deploying to Kovan network. Interaction of web and smart contract. Challenges with Merkle Root message format.
Accomplishments that we're proud of
We are proud of how we were able to find a simple and elegant solution to deal with private customer data on blockchain, the scalable and multi-use case contract architecture and certainly, we are proud of how we were able to work as a team.
What we learned
Plenty of new and useful stuff! Working with Merkle tree, linking web and smart contract into a working application, deploying contracts to a test network.
What's next for Loan Wolf
At the very beginning of our work on this Hackathon we targeted to find an idea that was worth working on even after the hackathon. We are planning to develop Loan Wolf concept further into production project. The next step is to do more customer development with lenders and borrowers to fine-tune the go-to-market product concept.