Lendscape: Decentralized Lending using tokenized real-world assets (RWAs) as collateral

Introduction

Lendscape is a decentralized lending protocol that enables borrowers to secure loans using tokenized real-world assets (RWAs) as collateral. Developed using the RWA.codes framework for MarsBase.network, Lendscape bridges traditional finance and blockchain technology by providing a transparent, efficient, and secure platform for both borrowers and lenders. By employing reliable oracles like Credora, utilizing token standards such as ERC-20 and ERC-721 for asset tokenization, and incorporating Special Purpose Vehicles (SPVs) for secure asset holding, Lendscape effectively manages risk through robust liquidation and default mechanisms.

Key Components of Lendscape

1. Tokenization of Real-World Assets

Asset Types

• Equity Instruments: Including SAFE (Simple Agreement for Future Equity), SAFT (Simple Agreement for Future Tokens), and other contractual agreements.
• Physical Assets: Such as real estate, commodities, and tangible goods.

Token Standards

• ERC-20: Used for fungible tokens representing divisible shares in asset pools.
• ERC-721: Used for non-fungible tokens (NFTs) representing unique assets or individual contracts.

Secure Asset Holding via SPVs

• Special Purpose Vehicles (SPVs): Legal entities established to hold the physical or legal rights to the real-world assets. Asset Backing: Tokens are backed by assets held within SPVs, ensuring legal enforceability and protection for lenders. Compliance: SPVs operate under clear legal frameworks, enhancing trust and regulatory compliance.

2. Reliable Oracles

Integration with Trusted Providers

• Asset Valuation: Delivers accurate and up-to-date valuations of collateral assets.
• Risk Assessment: Provides credit scoring and risk analytics for borrowers by leveraging both on-chain and off-chain data.
• Data Privacy: Employs zero-knowledge proofs to safeguard sensitive financial information.
• Real-Time Updates: Ensures prompt responses to market fluctuations for effective risk management.

3. Collateralized Lending Process

Borrower Workflow

1. Asset Tokenization: Borrowers tokenize their real-world assets using ERC-20 or ERC-721 standards.
2. SPV Arrangement: Assets are transferred to an SPV, which holds them securely on behalf of the protocol.
3. Collateral Submission: Tokenized assets are deposited into Lendscape's smart contracts as collateral.
4. Loan Request: Borrowers specify loan amounts and terms, subject to evaluation based on collateral value and risk profile.

Lender Workflow

1. Liquidity Provision: Lenders deposit funds into lending pools using stablecoins or accepted cryptocurrencies.
2. Interest Earnings: Lenders earn interest from loans facilitated by the protocol.

Smart Contract Execution

• Automated Matching: Matches borrowers and lenders based on predefined criteria.
• Terms Enforcement: Smart contracts enforce loan terms, including interest rates, repayment schedules, and collateral management.
• Governance Token Voting: Governance token holders participate in approving or rejecting specific loan issuances.

4. Governance and Community Participation

Governance Token Implementation

• ERC-20 Standard: The native governance token is built on the ERC-20 standard.
• Distribution: Tokens are allocated to participants, including lenders, borrowers, and contributors.

Voting Mechanism

• Loan Approval Voting: Community Oversight: Token holders vote on approving specific loan requests. Voting Process: Proposals are submitted, and token holders cast votes proportionally to their holdings.
• Platform Governance: Protocol Changes: Decisions on upgrades, fee structures, or parameter adjustments are made through community voting. Risk Management Policies: Influences policies related to collateral requirements and liquidation mechanisms.

Incentives for Participation

• Staking Rewards: Token holders may receive additional benefits for participating in governance processes.
• Alignment of Interests: Encourages stakeholders to contribute to platform stability and growth.

5. Risk Management and Security Measures

Asset Valuation and Monitoring

• Credora Oracles: Continuous Valuation: Ongoing assessments of collateral value ensure sufficient coverage. Credit Risk Evaluation: Assesses borrowers' creditworthiness for informed lending decisions. Automatic Alerts: Notifications when collateral values approach critical thresholds.
• Loan-to-Value (LTV) Ratios: Initial LTV Settings: Established based on asset class and volatility. Dynamic Adjustments: LTV ratios may adjust in response to market conditions or governance decisions.

Liquidation and Default Mechanism

• Trigger Conditions: Margin Calls: Initiated when collateral value falls below maintenance thresholds. Default Declaration: Occurs if borrowers fail to meet margin calls or miss repayments.
• Liquidation Process: Automated Execution: Smart contracts initiate the liquidation of collateral assets held by the SPV. Asset Disposal: Collateral is sold through authorized marketplaces or auctions. Proceeds Allocation: Funds from the sale repay outstanding loan amounts and cover associated costs.
• Default Management: Insurance Funds: May maintain reserves to mitigate losses from defaults. Recovery Actions: Legal enforcement through SPVs to recover outstanding debts.

Smart Contract Security

• Code Audits: Regular independent security audits to identify and fix vulnerabilities.
• Bug Bounty Programs: Encouraging community reporting of security issues.

Regulatory Compliance

• KYC/AML Procedures: Identity Verification: Mandatory KYC checks for all participants. Transaction Monitoring: AML compliance through monitoring and reporting suspicious activities.
• Legal Framework: SPV Jurisdiction: Established in compliant jurisdictions to ensure legal enforceability. Regulatory Engagement: Active efforts to comply with applicable laws and regulations.

6. Technological Infrastructure

Blockchain Platform

• Ethereum and Layer-2 Solutions: Built on Ethereum, with considerations for Layer-2 solutions like Polygon to improve scalability and reduce transaction costs.

Smart Contracts

• Modular Design: Separate contracts for lending, collateral management, governance, and liquidation to enhance security and maintainability.

Front-End Interface

• User Experience: Intuitive interfaces for borrowers and lenders, simplifying the lending process.
• Governance Portal: Tools for voting and tracking governance outcomes, enhancing community participation.

Integration with External Services

• Credora Oracles: For real-time asset valuations and credit assessments.
• Marketplaces for Asset Liquidation: Connectivity for efficient collateral disposal, ensuring timely recovery of funds.

Senior Pool: Simplified Lending with Diversified Risk

Lendscape introduces the Senior Pool as a key feature in its platform development. The Senior Pool aggregates liquidity from lenders into a single pool, which is then used to supply separate loans.

Key Features

• Simplified Usage: Allows lenders to participate without selecting individual loans, offering an automated investment approach.
• Diversified Risk Portfolio: Spreads funds across multiple loans, reducing exposure to any single borrower's default.
• Approximate APY of 19%: Reflecting a balanced risk profile based on the aggregated lending activities.
• Flexible Withdrawal: Lenders can withdraw their funds at any time, subject to liquidity availability.

Risk Management

• Priority in Repayment: Senior Pool lenders receive priority over junior lenders in loan repayments.
• Automated Allocation: The protocol manages fund distribution and risk assessment to maintain portfolio health.

Collaboration and Integration with DeFi Platforms

Lendscape actively collaborates and integrates with other decentralized finance (DeFi) platforms to enhance efficiency and provide participants with high returns on investment (ROI) and annual percentage yield (APY), while maintaining balanced risk profiles.

Objectives

• Leverage Liquidity Pools: Collaborate with liquidity providers and aggregators to increase the availability of funds for lending.
• Risk Diversification: Partner with platforms offering risk assessment tools and insurance protocols to mitigate lending risks.
• Yield Optimization: Integrate with yield farming and staking platforms to maximize returns for lenders.
• Interoperability: Develop cross-platform functionalities for seamless asset movement between Lendscape and other DeFi services.
• Shared Governance Initiatives: Participate in collaborative governance models to promote a robust and secure financial ecosystem.

Future Plans and Vision

Platform Expansion

• Asset Class Diversification: Incorporate a broader range of real-world assets to attract diverse borrowers and lenders.
• Cross-Chain Compatibility: Develop interoperability with other blockchain networks to enhance accessibility and scalability.

Enhanced Governance Features

• Advanced Voting Mechanisms: Implement methods like quadratic voting for fair representation among token holders.
• Proposal System: Enable users to submit and discuss protocol enhancements and changes.

Collaboration with DeFi Platforms

• Integration Partnerships: Establish partnerships to enhance liquidity, risk management, and yield optimization.
• Shared Services: Collaborate on oracles, insurance, and security audits to improve overall platform robustness.

Regulatory Compliance and Engagement

• Compliance Strategy: Adapt to evolving regulations to ensure long-term viability and trustworthiness.
• Transparency: Provide clear and accessible information to users and regulators about platform operations and policies.

Lendscape is a decentralized lending solution that integrates real-world assets into the blockchain ecosystem through tokenization. By utilizing reliable oracles, secure asset holding via SPVs, and robust governance mechanisms, Lendscape provides a comprehensive platform for collateralized lending. The introduction of the Senior Pool caters to lenders seeking simplified participation with diversified risk and flexible withdrawal options.

Developed using the RWA.codes framework for MarsBase.network, Lendscape focuses on transparency, security, and community involvement. By collaborating and integrating with other DeFi platforms, it aims to enhance returns and provide balanced risk profiles for participants, contributing to the growth and resilience of the decentralized finance ecosystem.

Get Involved with Lendscape

• Website: lendscape.xyz