In ‘Tokenomics’ a utility token may be defined as follows: “The buyer of a utility token has paid the issuer of the token money NOW so that the company can develop a product that the buyer of the token can LATER redeem for that good or service,” as Joel Camacho, a former Goldman Sachs banker and now co-founder of Decipher Capital explains.
Simply put, Lendo’s ELT –once the platform launches –will be the currency used within Lendo’s ecosystem in exchange for goods and services, and to access the services of other companies that accept ELT tokens.
The primary driver of use for ELT within the internal Lendo ecosystem is that token owners will eventually be able to use the ELT as collateral to get a loan or pay monthly interest and principal on other loans they have using the ELT. But the aim has always been to deliver as many uses as possible, because the greater the number of usage opportunities, the greater the demand for the token, and this underpins the token’s value.
Importance of a healthy token ecosystem
As with everything else in this world the demand and supply of a product determines its value. This is also the case for tokens that can be traded on exchanges. Lendo is in the process of building demand for ELT through an ecosystem where the ELT token can move in multiple directions between all ELT owners. This means that buyers and sellers can both spend and earn tokens within the ecosystem -interacting with each other, their peers, and the platform itself. This allows the ecosystem to be self-sustaining.
A unique ecosystem with Internal and External utility
The ELT ecosystem has been designed to have two types of utility: internal and external. As you can see in the diagram Lendo’s Unique Eco System below there are multiple uses for ELT on the internal ecosystem.
These range from loan-related payments and as collateral for a loan, to Lendo credit cards that can be used for purchases online, at retailers and withdrawals at ATMs and a mobile wallet app.
And we are working on building ELT’s external ecosystem through partnerships with other companies in the finance industry, where ELT can be used in exchange for their goods and services, such as smart bonds and crypto funds. And as the diagram above shows, ELT owners can exchange ELT for other cryptocurrencies, such as ETH, XRP and many more.
ELT as loan collateral — the utility we want to give ELT owners
One of our key aims is the acceptance of ELT as collateral for a loan. This is a form of utility that we believe will differentiate ELT from other tokens. It is also a persuasive argument for holding on to your ELT until such time as this use case becomes reality.
Now that the token is listed on an exchange, there needs to be a sustained period of trading to establish a substantial level of price stability, as well as a strong trading volume in order to use ELT as loan collateral. It is to early to predict how long this might take, but the intent to make it happen is strong and clear on our part.*
Lendo keeps forging ahead to build ELT’s utility
Lendo continues to build the utility case for ELT. We are always looking for ways to expand ELT’s ecosystem and we are always seeking more partners in the financial services world who will accept ELT for a variety of products and services, and thus strengthen the utility of the ELT token. In an increasingly tokenised world, ELT stands out from the rest of the crowd due to its multiple real world uses.
*Disclaimer: The provision of capital against crypto as collateral is at the discretion of the lender.