Cryptocurrency exchange Binance has invested in a decentralized global lending network called Libra Credit. The platform allows users to borrow fiat and crypto-denominated assets by pledging Binance Coin (BNB) as collateral.
The development team at Libra Credit is led by former PayPal financial tech veterans. The company’s goal is to revamp the lending industry by using machine learning and blockchain technology.
“The Libra Credit founding team has a wealth of experience and resources in financial services and payment solutions. They are committed to make long lasting impacts in the industry,” said Ella Zhang, CEO of Binance Labs.
The San Francisco-based startup was founded in 2017 by Dan Schatt and Lu Hua. Schatt, a fintech veteran and PayPal’s former general manager of Financial Innovations, published Virtual Banking: A Guide to Innovation and Partnering in 2014, a book on electronic payments, mobile commerce and virtual banking.
Hua is also a former PayPal engineer. Prior to Libra Credit, he founded Mo9, a Chinese credit service provider of mobile games and virtual goods for millions of video game players in China.
Libra Credit offers a variety of structures to bridge the gap between cryptocurrency and traditional finance.
- Crypto-to-fiat loan allowing collateralization of cryptocurrencies to spend fiat without sacrificing current crypto position
- Crypto-to-stablecoin loans enabling borrowers to hedge price volatilities without exiting the market
- Crypto-to-crypto lending allowing borrowers to pledge altcoins for more mainstream crypto currencies (i.e. BTC/ETH) with better liquidity
As the global demand for liquidity of crypto assets continues to grow, lending networks that are leveraging crypto assets are proliferating.
The industry includes competitors BlockFi, the first institutional investment in crypto-backed loans for Bitcoin and Ether, and Ethlend, Salt, Rad Lending and Nexo, which recently made a bid to buy Salt.