On January 26, 2017, LendingRobot, the fully automated peer-to-peer alternative lending platform, announced the launch of a new service that utilizes the blockchain for fixed income investments. The new service, LendingRobot Series, is a multi-platform hedge fund that utilizes the Ethereum blockchain, cloud technology, and automation to leverage alternative lending and predictable market returns. The platform has been under development for six years, with the goal of offering an alternative to traditional fixed income investments. Since the arrival off Ethereum, the LendingRobot Series is now able to offer its new service. ETHNews reached out to CEO, and founder of LendingRobot, Emmanuel P. Marot:
“We're focusing on well-established marketplaces that provide us with enough data to train our machine-learning algorithms. On top of that, we aim to build a fully diversified portfolio, hence investing in 3 different kinds of loans: Consumer credit, small business, and real estate.”
How the Platform Works
LendingRobot investments are diversified across four different marketplaces: Lending Club, Prosper, Funding Circle, and Lending Home. These investments have a target maturity age that ranges between 20 to 36 months and sustain net returns up to 9.66 percent. All investor cash is converted to shares from the four lending marketplaces and issued weekly. Shares increase with each recursive weekly loan payments. LendingRobot also publishes a weekly detailed ledger of its holdings that is integrated with a unique cryptographic hash code that clients can compute using a distinct hash algorithm for verification purposes.
Marot told ETHNews:
“The hash code we calculate every week for our assets’ ledger is like a 'seal'. We use Ethereum to notarize that seal.”
Traditional hedge funds typically charge management fees of two percent plus an additional 20 percent for performance. However, the LendingRobot Series only charges one percent of all assets under its management. When asked if LendingRobot will pay dividends, Marot stated:
“No. Regulations oblige us to follow strict anti-money laundering laws. All payments back have to be done through banks.”
To further minimize risk, assets are held in a bankruptcy protection vehicle that contains no other liabilities than those of its investors. After the initial sign up, investors are requested to select a risk tolerance level that enables LendingRobot to instantly make payments on their behalf. Those looking to cash out have to adhere to LendingRobot’s loan payment distribution priority (33 to 100 percent), which under normal circumstances, takes less than three weeks.
With roughly 6,500 clients and $120 million in assets, it’s important to maintain integrity and accountability of investments for both auditors and investors. When asked why LendingRobot chose Ethereum, Marot explained that Ethereum offers “faster confirmations and simpler oracles,” and provides the protection that’s needed to service the firm’s vastly diverse investor base.
“We serve only individual investors. As a Registered Investment Advisor, we cannot disclose their identity.”