Sydney fintech startup testing new blockchain platform
The business credit and data technology company is using Ethereum blockchain for credit, risk and debt trading and management.
This month, Sydney fintech startup Othera started testing its blockchain-lending platform, which makes use of Ethereum blockchain. The public blockchain platform features smart contract functionality and will be used by Othera to deliver a transparent and sustainable way to trade and manage credit, risk and debt. The platform is targeted at operators in financial and investment markets.
Othera, which are based in the BlueChilli startup incubator, have been providing credit analytics and investment solutions in the lead-up to launching its blockchain solution. Othera CEO John Pellew said the idea stemmed from his experience working in banking and finance in the UK during the GFC.
"As is widely documented, many investment products were packaged extremely poorly and were incredibly high risk, both lenders and investors suffered significant losses. This has not been easily forgotten. Investors nowadays , especially retail investors really think twice before they put their superannuation and hard earned savings into complex investment products that they don't understand."
While he had the idea for his solution for the investment market, it couldn't be realised until the release of Ethereum blockchain 18 months ago.
"I knew what I needed but I just hadn't found the technology with the technical capacity to bring my idea to life," he said.
Othera's blockchain lending platform creates a new class of asset token that enables trading in financial markets to be transparent. Two prototypes are currently being tested: the Othera Blockchain Lending Platform and the Digital Asset Trading Exchange. The two platforms are linked and let loan originators and investors directly connect or transact debt or asset-backed securities with lower risk and for known fixed returns.
The Othera Blockchain Lending Platform allows for a transparent transaction, wth a new class of asset token being created to enable the liquidity of the asset-backed security. The Digital Asset Trading Exchange then operates as a secondary market where asset tokens can be liquidated. The smart contracts feature of Ethereum blockchain means the transactional history of each asset token is available to users at any time.
"I have some of the most technically-experienced Ethereum blockchain developers in the country on this project. They have been working directly with the Consensys developers who are building the Ethereum code, even submitting requests for new features in the blockchain coding to help us achieve our aims," said Pellew.
Pellew is in discussion with Australian investment banks, non-bank lenders, local VCs and marketplace lenders that have shown interest in piloting the programs. An enterprise version of the lending platform is expected to be available in the next 12 months in the UK, US and Australia.