The mortgage industry can be a bit complex with processes that are completely paper-based, but Homelend’s platform hopes to solve that complexity and bridge the gap between the mortgage industry and Blockchain technology by using smart contracts.
Just like other blockchain-driven platforms, Homelend’s platform has an in-app token called the “Homelend token” or HMD token, which will fuel the P2P lending platform.
Why is Homelend’s Platform using a Token?
The HMD token was created and issued as a result of the economic dynamics associated with the platform. Unlike a number of other ICOs where the final product does not really have to be blockchain-based, Homelend’s platform is a lending system that has distributed ledger technology and smart contracts at its technological core.
One major feature of the platform is its ability to reduce friction costs, and the fact that it makes available financial services for a wide range of population that are under-served by mortgage lenders or banks.
With the HMD token, Homelend’s platform will be able to function independently without the need for any third party or financial intermediary to approve financial transactions. Also, the platform opens the opportunity for individuals to carry out P2P lending in numerous cryptocurrencies, which further broadens financing possibilities.
Using the token, the system will be able to standardize the access to services available in the platform, notwithstanding the cryptocurrency used to make a loan or the country where the transaction happens. Hence, Homelend is hedged against the volatility associated with cryptocurrencies, and levels the playing field for borrowers that find it hard to open a bank account due to limitations in local banking services.
What is the HMD Token used for?
The main function of the HMD token is to grant individuals the access to services that are provided by the platform. These services includes those provided through third parties in partnership with Homelend and those provided by Homelend directly.
Source: Homelend Whitepaper
The Homelend platform functions as a medium of facilitating P2P lending using standardized processes and smart contracts. The system creates a more accessible, efficient, and affordable process of originating mortgages. The borrower deposits an origination gas to equal 1% of the mortgage loan and is granted access to the financing mechanism.
The Economics behind the HMD Tokens
Digital tokens and cryptocurrencies have developed innovative ways of clearing transactions and transferring value. However, while they might be different in many ways from fiat currencies, they still follow some basic monetary theory principles. And the HMD token is not any different.
A major basic principle is the importance of token supply to ensure the sound management of the entire system. A number of Initial Coin Offerings (ICO) have been conducted over the years, with most them issuing tokens tagged as utility tokens, which are used for exchange within the platform. However, whether it is a utility token or a security token, the total number of tokens supplied during an ICO will determine the token’s total supply.
With Homelend as a P2P mortgage lending platform, the amount of funds lent correlates directly with the number of transactions that have been made via the HMD tokens.
In my next article, I'll be talking about the ICO event, and the team behind it all. For more information on the Homelend platform, be sure to check out their website
Disclaimer: As with all investments, you should do your own research. The information provided in this article is focused primarily on bringing the facts out of the white paper to supplement your due diligence. Please do your own research and make up your own mind.
Links:
Homelend Website
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Read the Homelend Whitepaper
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