EXLE (formerly Ergo-Lend) is a lending solution being built on the Ergo blockchain to reach those that most need DeFi.
EXLE is a new paradigm for lending. The goal is to leverage blockchain technology to create a global lending platform. A decentralized autonomous organization (DAO) will manage the platform.
Checkout the EXLE (Ergo-Lend) litepaper
The following is copied from the EXLE project page on ergopad, where you can find more info regarding EXLE token roadmap, tokenomics, and distribution.
Ergo-Lend will be a person-to-person (P2P) lending platform with easy to use tools to borrow and lend money. The goals of the platform are to:
These are achievable goals. Borrowers will have more borrowing options and better rates. Lenders will have the opportunity to make direct loans, like a bank, and make better returns.
The central problem of modern finance is it does not provide small loans at reasonable rates. Behemoth banks are unable to lend to everyone. Those they do not serve are sometimes described as “the unbanked”.
This limit is a function of how banks operate. Every loan has underwriting costs, financing costs and carries a risk of default. These are all costs paid for by the borrower in interest.
These costs create minimal loan requirements. Below a certain level, a bank does not make a return on the loan. As a result, banks will not offer loans below this level.
Loan Costs & Viability
Underwriting costs include the overhead of offices and underwriters. They include many fees. The application process takes a long time and is inefficient.
The costs of financing a loan are often dictated by the discount rates of national central banks. The central bank of Kenya benchmark rate has been between 7–18% over the past decade. In the United States, over the same period, the Federal Reserve offered benchmark rates between 0.25–2.5%.
Reducing these costs would make more loans viable.
A global blockchain platform can level the playing field. Smart contracts can automate much of the loan process. And, a global pool of lenders can reduce the cost to finance loans.
Blockchain technology, combined with cell phones, can reach people where they are. A loan is as close as an app on a cell phone, whether you are in a city or in a village. With this model, bank branches, mainframes and lawyers are not required.
Without less overhead, it is possible to make smaller loans, to more people. The challenge is: how do you create a new lending infrastructure based on blockchains?
With lower costs and better financing, the main loan risk is of borrower default. The answer to this problem is a combination of technology and community. Ergo-Lend will help create new financial tools and foster a community DAO.
The Ergo-Lend DAO will decide the best way to provide social underwriting for borrowers. It will also decide the future development and financial products of the platform.
Ergo-Lend is an attempt to bring the values outlined in The Ergo Manifesto to lending. Ergo’s creators have a vision: “… the tools of a cryptocurrency should allow people to do economic activity whatever the business size, geographic location, or interest rates set by big players.”
A democratic lending community is a significant step toward this vision. Democratic access to financial services is worth investing in. Greater and fairer access to loans will create new economic relationships and opportunities. It is a clear example of where good values can also bring good investment returns.
The Ergo-Lend Approach
The Ergo-Lend team has the technical and entrepreneurial capabilities to deliver. They are working with organizations on the ground in Kenya and Nigeria. Together, they will launch pilot projects. These will help develop the Ergo-Lend platform in real world environments. Then, these projects will be models for extending the platform to other communities around the world.
Democratizing finance has enormous potential to transform the way we save and loan money. “The unbanked” are an untapped and underserved market. By reducing the costs of modern banking, more people can take advantage of financial services. Blockchains, smart contracts and community DAOs can reduce loan costs. By doing so, they can reshape the credit landscape: not just for the unbanked, but for everyone.