BREAKING NEWS: Digix & ETHLend announce an extensive partnership on decentralized lending.
[Note: This is a press release.]
Tokenization of assets. Digix was one of the first proofs-of-concept on tokenizing valuable real-world assets. Tokenization means that a value is translated into a tradable and easily transferrable digital format, a token. Digital tokens may represent any value from the real world, such as commodities, shares or property.
Every DGX token contains the right to 1 gram of gold that is stored in an audited vault. Therefore, the value of the tokenized gold can be easily traded or pledged against a loan without moving the physical gold repository. This digital gold standard provides more flexibility to investors that are trading in physical gold.
Moreover, unlike many digital tokens whose value is based on speculation on a blockchain startups future, DGX tokens are subject to the price of real gold. Therefore, these tokens are useful in situations where an investor aims to avoid volatility, while still having the benefits of owning a digital good.
ETHLend is a decentralized peer-to-peer application that is running on Ethereum network. ETHLend is a global lending market that connects lenders and borrowers from all over the world. ETHLend offers secured loans with the use of ERC-20 compatible digital tokens as a collateral. The application is ideal for token holders who are in need for liquidity and all those who want to participate in a free lending market. Instead of selling and closing a token position, a borrower can easily pledge digital tokens to receive Ether.
ETHLend is additionally adding a function to tie Ether loans to fiat currencies to avoid volatility and allowing familiar loan agreements for everyone while keeping all benefits that separate blockchain technology from traditional banking: fast transactions even across borders, transparency for all parties and safety-by-design through self-executing contracts, called smart contracts.
Today Digix and ETHLend announce a mutual partnership that will create new use-cases and investment strategies for the DGX token holders and value stability and new functions for ETHLend platform users, whether they are individuals or businesses. The partnership consists of R&D collaboration, shared products and functions as well as combined efforts to educate and inform more people about the possibilities of business on the blockchain. The suitability of the DGX token on the ETHLend platform has already been tested successfully with test loans being collateralized by the gold token.
First, DGX token will be added as the first fixed token on the application. This means that a borrower who is willing to pledge a DGX token on ETHLend does not need to provide a smart contract address of the token. Instead, such information is readily available on the application.
Second, introducing a volatility feed. Since digital tokens bear volatility which must be taken into account, ETHLend and Digix will categorize the volatility of different tokens and map the results for users to understand the inherent risk of volatility. Such categorization is beneficial for the safety of loan participants and it highlights the power of asset-backed tokens such as DGX. Also, ETHLend will seek to incorporate a collateral-swap option, to allow on-platform asset swaps to low-volatility tokens, such as DGX, if the collateral value is dropping below a certain threshold in the middle of the loan.
Third, DGX as the token. ETHLend shall develop a smart contract on Kovan testnet to research the topic of token lending. ETHLend has received plenty of requests for lending tokens for different strategies such as short selling or hedging. DGX would be the token of choice for a stable lending basis. ETHLend will adopt token lending on the live decentralized application if the community continues to express the need for it.
More info: https://digix.global/
Images courtesy of ETHLend