Blockchain technology and its associated cryptocurrencies have been designed to make financial industry tools accessible 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. As decentralized finance (DeFi) takes the middleman out of the equation, a level playing field is given to billion dollar companies and ordinary humans, and higher interest rates also prevail. In practice, most decentralized loans today are made through a loan pool.
Traditionally, secured loans (also known as title loans) have used a valuable asset to help secure the loan amount, thereby reducing the risk to the lender – the concept being common for mortgages and auto loans. The only difference in the blockchain setup is that the cryptocurrency assets are pledged to secure the loan. Unfortunately, this process can be complicated if users own a diverse group of cryptocurrency assets spread across multiple blockchains. Additionally, while a single party should not control a true DeFi platform, many lending platforms available today operate with strict rules common to centralized operations. Sometimes these rules can make it difficult for new users to create and manage their loan pools or start lending at all.
Trava Finance aims to address these concerns as the world’s leading decentralized marketplace for cross-chain lending. The platform offers a flexible mechanism for users to create and manage their loan pools by setting their own parameters. The Trava loan pool launched on Thursday, September 16, marking a significant milestone for the team and an opportunity for users to gain experience in loan protocols.
Asked about their vision for the future of the platform, Dr Minh Nguyen, CEO and co-founder of Trava Finance, shares that they aim to “provide users with the best lending functions” by “supporting[ing] loan service users through on-chain data analysis mechanisms.
Responding to Current Concerns of Decentralized Lending
Trava Finance is deployed on the Binance Smart Chain (BSC), allowing loans with BSC tokens in the initial stages and cross-chain loans available thereafter. Additional applications of this mechanism currently provided by Trava are credit scoring and token health assessment. With this data, users will be able to better prevent risks and seize profit opportunities.
Usually in the financial industry, a credit score is a value used to represent an individual’s creditworthiness. A higher score can indicate to lenders that the borrower has a good chance of repaying the loan. On the other hand, borrowers can invest with prime interest rate if they have a high credit rating. Trava works with a similar model by providing users with a credit score to help them reduce loan risk and achieve a high loan-to-value ratio. By connecting their wallet, users can view their credit scores.
Scores are a combined value after Trava Finance collected and analyzed financial transactions from multiple blockchain networks including BSC, Polygon (MATIC), and Ethereum (ETH). Pool users can then set a minimum credit score for members to reduce the risk associated with loans.
In addition, Trava Finance uses a cross-chain identification protocol to identify the addresses of the same users on different networks. Then, users can use all of their crypto, non-fungible (NFT) tokens, stock tokens, and any other digital assets to combine as collateral into one loan for a huge transaction. NFTs are auctioned off to fix their price, with the winners then involved in the loan agreement either to profit from it or to buy the assets at low prices, which makes their borrowing operations easier.
For added security, Trava Finance’s loan pool and smart contracts are currently audited by the data and audit platforms Hacken and Certik.
Lend now and in the future
Just a week after the Trava Lending Pool launched, Trava’s TVL reached 13 million and reached a maximum 24-hour transaction volume of $ 7.84 million, according to CoinMarketCap. The Trava platform has also built an active community of 32,000 members and has appeared in over 300 different newspapers and media.
During the last quarter of 2021, the Trava team shares that their goal will remain the launch of the NFT Renting feature, the cross-chain protocol and a beta version of the Knowledge Graph. The platform launches NFT’s rental feature with the incentive program on October 18 at 3 p.m. UTC. TRAVA is also expected to be listed on SpookySwap on October 20.
Disclaimer. Cointelegraph does not endorse any content or product on this page. While our goal is to provide you with all the important information we may obtain, readers should do their own research before taking any action related to the business and take full responsibility for their decisions, and this article does not nor can it be considered as investment advice.