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Innovative loan made possible by Membrane

March 6, 2024
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Membrane Team
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Membrane has announced the successful completion of a first-of-its-kind undercollateralized loan between crypto market leaders.

The innovative loan, between Electric Capital and a prominent proprietary trading firm, was executed by Trident Digital Group, using Membrane’s SOC2-certified loan management system. The Proof-Of-Concept transaction opens the door for a new form of lending that Trident believes will become the digital asset standard. Their approach draws from traditional finance risk management while adjusting for the nuances of the digital asset market.

Electric Capital (over $1bn committed capital) lent AVAX to a proprietary trading firm with over $500mm in AUM, which was provided with 4x leverage. Trident onboarded with Cumberland’s OTC desk, as well as Wintermute’s, to facilitate liquidations if required. Loan booking and management was handled via Membrane Labs’ Loan Management System while Trident rolled out the first risk and liquidity management endeavor in the lending space.

“Trident’s approach to security and risk management gave us confidence to lend our assets. Their strategy will help unfreeze the lending market,” said Jim Bai, investor & trader at Electric Capital.

The choice of loan management system, counterparties, loan denomination and collateral ratio were given great consideration,” said Anthony DeMartino, Co-Founder and CEO of Trident. “For our product to work, we needed the terms to be commercial, the counterparties to be real, and the token to be in demand.  While BTC and ETH are relatively available, our conduit will focus on lending alt coins so AVAX was a great choice for what we are trying to achieve.”

Trident’s conduit structure allows institutions to engage in loans where both sides have full transparency on the risks being taken. Trident will manage and execute the provisions of the loan as well as diligently monitor the risks and liquidity of the assets backing the loans and will execute liquidations as required.

The two firms agreed to terms on a partnership where Trident Digital will use Membrane’s infrastructure to offer innovative lending solutions.  Trident’s “Lending Conduit” will allow institutional lenders and borrowers to connect on appropriate risk-adjusted returns.  There will be no commingling of loans and no cross contagion risks as the firm seeks to minimize counterparty risk.  Trident’s offering also looks to optimize security and transparency for lenders and offer capital efficiency for borrowers.  The goal is to unlock billions of tokens sitting on lenders’ balance sheets who no longer have the infrastructure to lend their tokens on the proper risk adjusted terms.

“We believe that getting liquidity back to the spot market, specifically in altcoins, will allow for the market to grow on a healthy foundation.  This foundation will have spillover benefits for derivatives and DeFi”, said Mr DeMartino.

“Our decision to partner with Membrane was simple – their best in class technology, deep crypto native relationships and their SOC2 certification allows Trident to bring its solution to the market one year faster than anticipated,” said Dr. Amir Sadr, CRO and Head of Product of Trident.

“As the ecosystem bounces back and the appetite for lending returns, Trident is leading the revolution for safe leverage with their novel Lending Conduit structure, built on top of the Membrane platform.  Our partnership enables market participants to securely access leverage in a capital efficient way with funds remaining on exchange where it can be usefully deployed,” said Carson Cook, Membrane Founder and CEO.

 

 

About Membrane Labs, Inc.

Membrane Labs is a digital asset fintech company offering enterprise-grade lending, spot trading, derivatives, and collateral management software (SaaS). Its cross-blockchain and custodian-agnostic settlement engine is included for efficient and secure digital assets management. Their customizable and modular technology provides investors with the versatility and customization needed to thrive in today’s evolving world of crypto.

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