by Charlotte Eli
DeFi, an Alternative to Financial Intermediation? Where Does Atlendis Labs Stand?
Atlendis Labs, an Hybrid Company
In recent years, the concept of decentralized finance has gained considerable attention as a potential alternative to traditional financial systems and intermediation. However, it faces significant challenges that hinder its growth potential. One key challenge is the limitation of fully on-chain operations as well as compliance with current laws and regulations, which restrict DeFi's potential to mostly circular speculative activities. While decentralized finance offers exciting opportunities for disintermediation and empowerment of individuals, interfacing it with the real world is not without difficulties.
Atlendis Premises, as a Fully Decentralized Finance Protocol
At Atlendis Labs, our objective has consistently been to enhance the capabilities of DeFi by addressing its limitations. We've been particularly drawn to the challenge of over-collateralization in lending—a barrier to blending blockchain technology with private credit. In response, we've developed a protocol for on-chain under-collateralized lending. Our aim was to create a more inclusive and accessible lending market through Atlendis, allowing borrowers to secure loans without excessive collateral demands.
At the outset, our organization operated as a DeFi protocol, deeply rooted in technological innovation, smart contract security, and decentralized governance. With our hallmark product of revolving credit lines and after various experiments, we strategically focused on real-world businesses with persistent short-term liquidity needs. This encompasses entities in trade finance and revenue-based financing. Our direction was further influenced by our conviction that conventional financial institutions often fall short in addressing the unique demands of small and medium-sized enterprises.
We soon realized the imperative to expand our offerings beyond what can be achieved through decentralised governance to present attractive investment opportunities for our liquidity providers and to facilitate the onboarding of non crypto native borrowers. Providing unsecured loans demands stringent regulatory compliance, a solid legal framework, and meticulous financial due diligence.
Non DeFi Native Atlendis Offering
In addition to our involvement in DeFi, we decided to expand our services to include non-DeFi offerings. This expansion allows us to cater to a wider range of investors and to provide the same legal guarantees then traditional financial products while still leveraging operational efficiency and liquidity of global public blockchains.
Onboarding traditional businesses to our crypto lending platform presented significant challenges, primarily stemming from a less-than-ideal user experience and the general unfamiliarity these businesses had with had with chain operations and self custody. Recognizing these hurdles, we developed Atlendis Flow. Its primary aim is to streamline the onboarding process and to fully abstract the blockchain component.
Atlendis Flow provides institutional clients with tailored custody, on/off-ramp services and assist clients in interacting with the Atlendis lending protocol. Atlendis Flow recently obtained DASP (Digital Asset Service Provider) registration from the French AMF (financial markets regulator). This registration is a significant milestone for Atlendis as a DeFi lending protocol, as it paves the way for institutional borrowers to safely interact with financial blockchain applications without developing in-house capabilities.
To prevent money laundering and comply with regulatory requirements, we've implemented KYC (Know Your Customer) pools. These KYC pools are specially designed systems that require participants to provide detailed identity verification and documentation. This step is crucial in ensuring that all users and transactions are legitimate, reducing the potential for fraudulent activity. By introducing KYC pools, we are not only aligning with global financial standards but also creating a more secure, transparent, and trustworthy environment for all users.
Enhanced Legal Set Up
We have implemented an improved legal framework to ensure compliance with regulations and to create a more secure lending environment. Our new legal framework provides reassurance to international users, as it bears a striking resemblance to established norms in international trade and traditional finance. Rather than direct lending to a borrower, Atlendis Lenders will support a Delaware-incorporated SPV (Special Purpose Vehicle) designed exclusively for lending purposes. Lenders are thus more protected, having clear claims on assets in case of default, with oversight from a security agent. The introduction of this advanced legal framework marks a pivotal advancement for Atlendis Labs. It combines off chain legal guarantees with on chain benefits such as instant settlement, operational efficiency and liquidity
We have partnered with a third party that, in addition to their role as a security agent, also takes charge of the underwriting and credit scoring process. Their involvement ensures that potential borrowers undergo a comprehensive and stringent evaluation based on their creditworthiness and financial stability. By overseeing this critical function, our third-party partner upholds the confidence of lenders. Their expertise in underwriting and credit assessment further fortifies the robustness of our lending protocol, enhancing the overall security and reliability of the system.
Atlendis Labs, an Hybrid Company
Incorporating traditional financial practices into our Lending Protocol not only ensures compliance but also mitigates financial risks. This positions us as a distinctive hybrid entity. Our innovative model seamlessly merges the advantages of global public blockchain with the indispensable regulatory frameworks and risk management strategies inherent to the traditional financial systems.
By integrating non-DeFi native services into our protocol, we can diversify our borrower base and provide enhanced investment opportunities for our LPs. This ushers in a novel asset class to the blockchain – one that remains uncorrelated to typical crypto market fluctuations and has historically been accessible only to a privileged few, both for lending and borrowing. Through Atlendis' initiative, the chasm between traditional finance and global blockchain is bridged, paving the way for users to tap into state-of-the-art decentralized financial solutions in a secure and trustworthy ecosystem.
Co-Founder & Research Director
Charlotte is the Co-Founder and Director of Research at Atlendis Labs. Charlotte worked for several years in traditional finance as a Quantitative Research Analyst in Paris and London before joining the world of blockchain in 2017. Before Atlendis Labs, Charlotte worked as a Financial Engineer on one of the first DeFi project at ConsenSys. Charlotte holds a degree from EPFL in Switzerland with a Master's in Financial Engineering. She also has a Master in Data Sciences from Telecom Paristech and is currently pursuing a PhD at the University of Paris Dauphine-PSL.