When we first started working on a lending platform, we wanted it to be a peer to peer system that would enable individual lenders to give out loans directly to borrowers.

We carefully mapped out platform roles, designed the complex incentive system and at the same time started to evaluate the legal situation of p2p lending in the world. After our initial research, we contacted several law firms as well and they confirmed that the regulation situation is unclear to say the least.

At this point of time we had hundreds of hours invested, we couldn’t continue to build something that won’t even be allowed to function, so we shifted towards a platform where instead institutional lenders provide liquidity for borrowers.

Although we could have built our own liquidity pool – a platform with a centralized pool of liquidity can’t provide one of the biggest perks of Inlock: keeping interest rates down by having market competition. When someone wants to take out a loan on our platform, they first have to submit a lending request, in which they can specify the loan duration, the overcollateralization amount, the loan amount, and the type of crypto to be used as collateral. Once it’s complete, it gets submitted to our platform where lenders can browse through all lending requests. Because lenders compete on the platform, they try to offer the most favourable conditions to make sure the borrower chooses them. When a borrower accepts the lenders proposal, a loan contract is formulated. These are smart contracts, ensuring the agreement between the two parties is irrefutable.

Our first lender partnership is already signed with Virpay, who is committed to provide the necessary FIAT liquidity during the platform’s MVP period.