Blockchain technology and its associated cryptocurrencies were designed to make tools of the financial industry available to anyone with an internet connection. Like traditional banks, cryptocurrency assets offer all of the same products, including borrowing and lending, only in a decentralized format to reduce fees and discrimination. Since decentralized finance (DeFi) eliminates intermediaries from the equation, equal opportunities are given to billion-dollar companies and regular humans, and higher interest rates also prevail. In practice, most decentralized loans today are conducted through a lending pool.
Traditionally, collateralized loans (also known as securities-based loans) use a valuable asset to help secure the loan amount, reducing the risk for the lender — the concept being common for mortgage and auto loans. The only difference in the blockchain setting is that cryptocurrency assets are pledged to obtain the loan. Unfortunately, this process can be complicated if users hold a diverse group of cryptocurrency assets spread across multiple blockchains. Furthermore, while a single party shouldn’t control a true DeFi platform, many lending platforms available today operate with strict rules common to centralized operations. At times, these rules can make it difficult for new users to create and manage their lending pools or to begin lending at all.
Trava Finance aims to address these concerns as the world’s first decentralized marketplace for cross-chain lending. The platform offers a flexible mechanism for users to create and manage their lending pools by setting their own parameters. The Trava Lending Pool was launched on Thursday, Sept. 16, marking a significant milestone for the team and an opportunity for users to gain experience in lending protocols.
When asked about their vision for the platform's future, Dr. Minh Nguyen, CEO and co-founder of Trava Finance, shares that they aim to “provide users with the best lending functions” by “support[ing] users of lending services through on-chain data analysis mechanisms.”
Addressing today’s concerns of decentralized lending
Trava Finance is deployed on the Binance Smart Chain (BSC), allowing for lending with BSC tokens at initial stages and cross-chain lending available after. Additional applications of this mechanism currently provided by Trava are credit score and token health assessment. With this data, users will be able to better prevent risks and take profit opportunities.
Typically in the financial sector, a credit score is a value used to represent the creditworthiness of an individual. A higher score can indicate to lenders that the borrower has a good chance of paying the loan back. On the other hand, borrowers can invest with a preferential interest rate if they have a high credit score. Trava operates with a similar model by providing users with a credit score to help them reduce lending risks and obtain a high loan-to-value ratio. By connecting their wallet, users can see their credit scores.
Scores are a combined value after Trava Finance collects and analyzes financial transactions from multiple blockchain networks, including BSC, Polygon (MATIC) and Ethereum (ETH). Pool users can then define a minimum credit score for members to reduce risks associated with lending.
Furthermore, Trava Finance uses a cross-chain identification protocol to identify addresses of the same users across different networks. Next, users can use all their crypto, nonfungible tokens (NFTs), stock tokens, and any other digital assets to be combined for collateral in a single loan for a huge transaction. NFTs are put through an auction to price this, where winners are later involved in the lending contract to either profit or buy the assets at a low price, helping to facilitate their borrowing operations.
For added security, Trava Finance’s lending pool and smart contracts are currently audited by data and audit platforms Hacken and Certik.
Loaning now and into the future
Just a week after the launch of the Trava Lending Pool, Trava’s TVL reached 13M and hit a max 24-hour trading volume of $7.84 million, according to CoinMarketCap. The Trava platform has also built an active community of 32,000 members and appeared in more than 300 different newspaper and media outlets.
Over the last quarter of 2021, the Trava team shares their focus will remain on launching the NFT Renting feature, the cross-chain protocol and a Beta version of the Knowledge Graph. The platform is launching NFTs renting feature with the incentive program on Oct. 18, 3 pm UTC. TRAVA is also expected to be listed on SpookySwap on Oct 20th.
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