Perhaps the most ambitious project is the LendingStar Exchange. The exchange, called LSX, is the first invoice exchange built on the blockchain. Invoices originating from our marketplace and other marketplaces around the world can be traded on the exchange.
The architecture of LSX will be built completely on the blockchain and will permit trading in any fiat and cryptocurrencies, including bitcoins and ethers. It will be ready in late 2018.
Alternative finance has been enjoying growth at a breakneck speed. In five years, the industry (excluding China) has provided US$50B (2016) annually, compared to US$1.5B in total volume in 2011. China, with almost 4,000 operators, added another US$93B in 2016.
Today the industry is regarded not as an alternative, but as a mainstream source of finance.
The accelerated growth has caused problems. Marketplaces grew demand faster than supply. Long term, there is a shortage of available liquidity to fund new projects. There are more mouths to feed than money available. What’s more, these third-party marketplaces hold the greatest volume, but present the least opportunity for cyptocurrency investment, because today the majority of investments are made in fiat currency.
Direct P2P, crowdfunding, and invoice financing marketplaces do not provide investors adequate liquidity as a loan, and an invoice or project (crowdfunding) cannot be sold before maturity. The problem can be likened to an investor who buys stock in a company, and after purchasing the stock, is told they have no option to sell the stock on a stock exchange. It’s ludicrous.
In a forecast produced by our investment advisors, we found that by 2020 the LendingStar marketplace will have a liquidity problem. Even with careful planning, every customer we add in 2019 will create a supply deficit. We expect the recent spate of invoice crypto marketplaces to encounter a similar problem.
The LendingStar marketplace and third-party marketplaces share a common problem. Investors cannot sell these assets. Once bought, the asset must be held to maturity and cannot be exchanged, either through the marketplace that sold them the security, or via an independent exchange. The investor is required to buy the asset and hold it until maturity.
This limits the number of investors who can participate, either because they have no risk appetite to commit more funds, or because they lack the funds to make further investments. Given a chance to sell these assets, they could perform more transactions, increasing the volume.
We have decided to solve the problem with LendingStar Exchange, or LSX. LSX is the world’s first invoice exchange built on the blockchain. LSX is an I2I (investor-to-investor) platform where investors can trade any cryptoassets backed by an invoice or other trade receivables. LSX will provide a greater number of investors and liquidity, and permit investors to trade both crypto and fiat currency.
Any investor, from day traders to institutional investors taking a longer position, can participate.
These cryptoassets recognize the underlying asset traded, and can be traded in any fiat and cryptocurrencies, including bitcoins and ethers.