With the prevalence of lending in the traditional financial world, it makes sense that lending activities and services would surface in the cryptocurrency space as well.

CryptoPotato recently caught up with Aave CEO Stani Kulechov, and our interview took place in the middle of the Mediterranean on board a Royal Caribbean cruise during Coinsbank’s recent Blockchain Cruise 2019.

Aave’s flagship product is ETHLend, a decentralized lending platform, which was around back in 2017. This means that the project had to weather the bear market of 2018. With such new technology and variable market conditions, it can be difficult to foresee where such projects will end up.

Roadmaps Are Tough

ETHLend is one of the oldest ERC-20 based ICOs. We actually got the chance to interview Stani Kulechov in November 2017, just before the crypto bubble popped.

When asked about changes to their roadmap since then, the CEO explained to CryptoPotato, “In terms of [a] roadmap, it’s challenging to plan anything, especially in technology, especially in blockchain technology.” The company brainstormed about what might be necessary in the lending sector and looked at concepts and instruments from traditional finance to see if they could apply them to the crypto space, Kulechov explained. “Then, basically, we did pretty much everything that we had in our original roadmap.”

Kulechov noted, however, that some parts of ETHLend’s roadmap were not particularly useful. “We updated in a way that you see the whole lenders and borrowers marketplace from the website without actually the need to sign up,” he explained. “We also added a new statistic page,” he added, which displays stats such as volume and interest rates.

The team also added to its roadmap, the CEO noted. “Now that we have this kind of two-folded marketplace, we will keep it for the OTC [over-the-counter] deals so you can agree with any other borrower or lender, and we match those orders,” he said.

Moving forward, ETHLend will be working on Decentralized Lending Pools, or DLPs for short. “The idea is to do kind of like an open-source protocol that anyone can use and create their lending pools and govern those lending pools by themselves,” Kulechov said.

“The idea is to create ready-made liquidity where lenders can just put funds into that pool, or any specific pool, and get passive income, and they can withdraw, and borrowers can basically come and take that liquidity,” according to Kulechov. This will help smooth the process for those looking to borrow, as well as assist in the area of liquidity. The CEO foresees launching “within a few months”.

The Only Crypto Business Enjoying Bear Markets

Kulechov noted that ETHLend gathers the least amount of customer data possible, adding that ETHLend desires to respect ETHLend clients’ privacy. He noted that the present decentralized lending model does not employ Know Your Customer (KYC) practices because such operations do not deal in fiat currency (USD, AUD, etc.).

Deciding not to collect data can, however, present difficulties. “We don’t want to be blind, because if we don’t know anything about our users, basically, we don’t know what to prove,” Kulechov said. The ETHLend CEO stated that his operation utilizes email communication as well as customer surveys to become familiar with users.

ETHLend is maybe the only crypto-based platform out there that actually benefits during bear markets. “The recent bear market of 2018 was actually good for our lending platform,” according to the CEO. “Many investors and custodians didn’t want to sell their crypto for low prices, and we actually saw a massive rise in the number and volume of lendings during the peak of the bear market [around the end of 2017].”

Introducing Bitcoin-Based Loans

ETHLend recently announced the introduction of Bitcoin as collateral on the platform. Kulechov described the difficulties with Bitcoin, as the asset operates on a separate blockchain from Ethereum’s. “What we need to do is set up an oracle in between Ethereum smart contracts and the Bitcoin network. Each time there is a new loan, what we are doing is we are creating a multi-signature wallet where there’s three keys – one for the lender, one for the borrower and one for the oracle,” he said. “Our oracle signs, for example, if price agrees on the collateral or the other party didn’t repay the loan.”

Not Working With Tether

In response to a question regarding Tether (USDT), Kulechov noted a few difficulties with relying on the token. “The problem with Tether is firstly technical because it’s an OMNI chain,” he said. “They do have an ERC20-based USDT,” he noted, adding, “It’s something that we also decided not to take because, even though it’s big, we don’t know what volumes are real.” He added, “The Tether isn’t based on a 1:1 relationship in the backing, but for me, I think economically, it’s not an issue.”

In regards to other stable coins with which ETHLend is working, Kulechov stated, “We are also betting a lot on MakerDAO’s DAI stablecoin. We work closely with MakerDAO.” Kulechov also noted the platform’s support for TrueUSD (TUSD), Paxos Standard Token (PAX), and USD Coin (USDC), run by the Goldman Sachs-backed startup Circle.

Our last question concerned crypto adoption. According to the CEO, the DeFi market is growing quickly, and thanks in part to education from news outlets like CryptoPotato, it’s only a matter of time until people realize how easy it is to use these products.

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