TL;DR: Atlendis is focusing on real-world business use cases to offer lenders sustainable and impactful investment opportunities, and providing businesses and fintech (financial technology) intermediaries with a new source of liquidity in decentralized finance. An in-depth focus of the use cases services is available on Atlendis’ new website.
In this line, Atlendis Labs decided to close the Wintermute, Parallel Capital and ZigZag pools, and announced the opening of two new borrowing pool: Fluna.

Introduction

With the evolution of regulatory frameworks and the advancement of technologies enabling the tokenization of assets, DeFi (decentralized finance) is making boundaries with TradFi (traditional finance) more permeable. Behind the trending yet somewhat ill-fitting term RWA (real-world assets) for example, is the idea of accounting for off-chain assets on blockchains. Blockchains and regulation are enabling intangible and tangible assets – financial instruments like corporate or government bonds, insurance letters, and derivatives, but also hardware, physical infrastructure, etc. – to carry ownership into tokens that can be used in DeFi, thereby unlocking exchange and financing on this new technological paradigm. In this way, an SME’s (Small or Medium Enterprise) tangible infrastructure may be considered for the underwriting of a loan in DeFi, and bring that organization the benefits that come with it.

In this light, the term RWA sounds redundant and bound to disappear as the passing from a legacy to a new financial system becomes imperceptible. Until then, such regulatory and technological developments improve – or even unlock – the onboarding of institutional actors onto DeFi.

Particular players and beneficiaries are organizations that extend financial services to traditionally underbanked SMEs and help close funding gaps left by TradFi. These businesses are sometimes labeled AltFi (for Alternative Finance), and include digital banks and Fintech intermediaries that offer SMEs alternative financing solutions, while leveraging the benefits of digital services such as open banking and technologies like distributed ledgers.

In 2023, Atlendis Labs will continue capitalizing on these dynamics, focusing on onboarding businesses that serve real-world business use cases and developing the Atlendis protocol to address associated challenges. This involves the ongoing exploration of these actors’ respective industries and financing needs to mature Atlendis Labs’ understanding of its borrowers and lenders, and develop the V2 of Atlendis’ smart contracts. The new version of the Atlendis protocol is planned to launch in Q2 2023 with a series of new products and features detailed in the following sections.

By using Atlendis’ smart contracts, Fintech intermediaries can effectively optimize inefficiencies commonly found in TradFi – transaction costs, time and traceability, overall transparency, security and censorship – while tapping into a new source of liquidity. 

As for Atlendis lenders, they will find an array of impactful opportunities to gain exposure to new asset classes and earn sustainable yield from real-world economic activity. Lenders can easily build a portfolio by choosing a borrower, setting a lending rate and will then receive an NFT that dynamically reflects their lending position.

Why is Atlendis Labs focusing on real-world business use cases?

Firstly, investors’ risk-aversion shifted at the end of 2022 with the series of company collapses and market crashes, and expectations rose for healthier decentralized credit markets. Credit markets were then affected by substantial amounts of bad debt issued by CeFi actors at low interest rates, despite some borrowers using the funds to gain exposure to risky assets and overleveraged positions. This trend of over-speculation pushed interest rates and risk assessment standards down, and systemic risk up.

Credit markets adapted during the subsequent recovery period and sought to meet investors' demand by providing more sustainable and regulated debt. One way to do so was to combine blockchain’s advantages with real-world collateral, push for regulation and legal enforcement frameworks, and combine on-chain with off-chain data obtained from open banking to improve risk assessment standards in DeFi.

Secondly, a real-world business use case focus is organic and for the mutual benefit of Atlendis’ lenders and borrowers, including underserved SMEs that lack access to suitable and affordable financing and Fintechs serving this ecosystem. Atlendis Labs has always built the protocol with the idea to democratize blockchain technologies to finance real-world business use cases and contribute to the creation of a more transparent and inclusive financial system.

At large, heading towards seamless communication between the legacy and the new financial system will benefit all credit markets actors and reinforce the stability and sustainability of DeFi overall.

How is Atlendis Labs going to serve these ambitions?

To keep the momentum, Atlendis Labs first had to make difficult decisions. Initially suspending some of its existing borrower pools in November 2022 to safeguard lenders’ interest and minimize risk during a period of high uncertainty, Atlendis Labs took the decision to close the Wintermute, Parallel Capital and ZigZag pools and is no longer serving market making use cases as of February 2023.

Conversely, Atlendis Labs announced on March 1^st, 2023 the onboarding of a new borrower, Fluna, that alongside Sirox Finance epitomize the ambition of the protocol to democratize institutional credit markets.

Simultaneously, Atlendis Labs keeps building upon the successful V1 of the Atlendis protocol to provide new and use case specific products and features. These will include:

• pool compliance options – permissionless, regionally restricted or Know Your Business (KYB) and Know Your Customer (KYC) gated pools.
• new credit products such as loans and bullet loans (a type of loan where the payment of the principal is due all at once at maturity), in addition to revolving credit lines.
• Flexible exit for lenders to make lending on Atlendis more liquid.
• Atlendis is maintaining its interest rate order book that enables lenders to choose their lending rate, and borrowers to control their cost of financing.
• Atlendis Labs is also active in bringing more borrower information to lenders, and increasing the plurality of due diligence on each borrower of the protocol.

Finally, borrowers will sign a Master Loan Agreement to provide lenders with more legal clarity and certainty over the transactions through Atlendis, in comparison to a legal framework mainly based on the terms of use. This will also allow for the loans on Atlendis to include covenants. In addition, the Master Loan Agreement can provide the basis for legal recourse against any defaulting borrower.

What use cases are going to be addressed specifically?

Atlendis has already been serving real-world business use cases through the pool opened in August for Sirox Finance – a Fintech company abstracting the technical and regulatory complexity of borrowing on DeFi to lend fiat to European SMEs.

Among the multitude of real-world business use cases that exist and are yet to be invented, Atlendis Labs is currently focusing on the following:

• Revenue Based Financing (RBF)
• Emerging Market Credit (EMC)
• Trade Finance (TA)
• Buy Now Pay Later (BNPL)
• Ramps and Cash Advance

All use-cases are presented in depth on Atlendis’ dedicated use-cases page. 

In most cases, borrowing pools will be open to Fintech firms that provide financing options to SMEs and startups thanks to open banking, a banking system in which consumers and businesses can allow banks or other financial service providers to access data about their assets and financial transactions through secure online channels.

Credit scoring providers on the Atlendis protocol will perform a thorough due diligence on these intermediary Fintechs, while the latter are responsible for the risk evaluation of their customers as well as the underwriting and monitoring of the loan.

What are the upsides of real-world business use case financing on Atlendis?

For borrowers:

• Flexible and transparent access to financing from new alternative sources of liquidity.
• Save on third-party intermediary fees.
• Tailor a liquidity pool from a variety of financing products – revolving credit lines, loans and bullet loans, and flexible loan parameters.
• Benefit from blockchain’s transparency, immutability and efficiency to reduce accounting and auditing overhead, and back office costs.
• Leverage blockchain’s security.
• Increased financial inclusion.

For lenders:

• Benefit from the blockchain’s transparency as well as from the transparency brought by reports and data boards provided by Fintechs like Fluna.
• Atlendis’ NFT reflects lenders’ position to make for a dynamic portfolio representation.
• Diversify their portfolio and choose their lending rate across a series of borrowers and financial products.
• Access an alternative and sustainable source of yield on products that are not necessarily correlated to crypto cycles.
• Increased financial inclusion.

For Atlendis:

• Increase protocol stability with more sustainable and better regulated debt.
• Experience about compliance requirements to onboard institutions.
• Opportunity to develop the protocol to comply with the latest regulatory requirements.
• Opportunity to develop the protocol to meet diverse financing needs: launching new credit products such as bullet loans.
• The protocol differentiates itself from competitors with its intuitive interface and products to serve inexperienced lenders, while offering expert granularity, more advanced financial products and tailor-made liquidity pools for professionals.

About Atlendis 

Atlendis is a capital-efficient credit protocol connecting DeFi with real-world use cases. Atlendis fills the gap that traditional finance (TradFi) has not been successfully able to cover. Leveraging blockchain technology and open banking, Atlendis enables Fintech and institutional actors to open dedicated liquidity pools and access one-time loans and revolving lines of credit, thus facilitating alternative financing for the growth and development of their SME and startup customers across the globe. Atlendis makes it possible for any lender to control their portfolio while earning real yield and making a meaningful impact helping real-world businesses.

Additional Resources

app.atlendis.io | Atlendis.io | Whitepaper | LinkedIn | Twitter | Discord | Intern | Newsletter | Audit reports 1 and 2 | Bug bounty program