The $48,483 grant will be enough to build out and test the MVP version of this project. However, given that the project will be in minimum viable stage, several functionalities will be manual. We will be leveraging smart contracts on Soroban to automate a large part of the loan processes as we scale. For this next part of the development, we will be able to bootstrap the development costs using the loan revenues from our XLM-backed loans. 

Enhance Wallet Infrastructure to Accept XLM:

Description: Create operational workflow to generate XLM wallets needed to house client funds used for collateral. Complete design of entire lending flow dashboard. 

Measure of Completion: XLM wallets can be automatically assigned to clients when a new loan request is made

Estimated Completion Date: 1.5 weeks

Budget: $9,918

Create Loan Dashboard & Automate LTV Triggers:

Description: Design & build out a retail loan dashboard that will eventually display amount owed, collateral posted, current LTV, payment history and collateral txn history. Build controls to internally track various loan triggers (e.g. LTV threshold breached, payment received, collateral received)

Measure of Completion: Version 1 of a dashboard is live and customers are able to view their XLM loan metrics

Estimated Completion Date: 2 weeks

Budget: $9,525

Beta Launch of XLM backed Loans:

Description: Legal update of loan documents to incorporate new collateral optionality & automated loan liquidations. Perform a soft launch of the XLM backed loan product. Revamp of landing page to include loan calculators and direct loan application prior to account creation.    

Measure of Completion: USD loan backed by XLM is issued.

Estimated Completion Date: 1.5 weeks

Budget: $29,040

Lantern will revolutionize how XLM holders leverage their assets, offering a seamless path to liquidity without selling. We will do this by expanding our existing product suite to include XLM as a collateral option for clients looking to borrow USD or stablecoins. 

Current State: Today, there are limited options available for XLM holders to easily use their tokens as collateral for a USD or stablecoin loan. Previous crypto lenders like BlockFi & Celsius have since gone bankrupt or are no longer operational. This implosion stemmed from a slew of risky institutional lending between these companies, which eventually took the retail lending space down with it. While there are DeFi options, these aren't ideal for many investors who are risk averse and not tech-savvy given the tax & compliance headaches, multiple layers of smart contract risk, and sub-par user experience.

Product Benefits: A collateralized loan from Lantern will allow XLM holders to get access to dollars without having to sell their assets. This way, investors can retain upside if they are bullish on the value of XLM long-term, as well as defer capital gains taxes. In return, Lantern will custody the clients' XLM collateral in our BitGo cold storage wallets (insured up to $250MM), which will be used to cover any potential loan losses should the price of XLM fall drastically. Our loans are over-collateralized (typically around a 25-40% loan-to-value at origination), which gives Lantern ample time to allow clients to address margin calls, as well as protect the Company from losses. USD loans enter margin call once they hit a 60% LTV and will have some of their collateral force-liquidated once the loan hits 70% LTV.

From a regulatory standpoint, we obtained a legal memo confirming that custody of assets in the context of loan collateral does not trigger any money-transmitter license requirements.

What Makes This Time Different: Unlike previous crypto lenders like BlockFi & Celsius, Lantern will not be engaging in undercollateralized institutional lending with our clients’ crypto collateral. Previous platforms commingled client funds with other tokens on hand, which exposed their clients’ balances to outsized counterparty risk. Our product is designed to keep client collateral in a designated wallet for the life of the loan and will only be touched should the loan trigger liquidation or repayment of the loan. 

Target Audience: Our ideal customer profile (ICP) are urban professionals usually in finance, consulting, tech, between ages of 25-45. They tend to be higher net worth with ~25-50% of their portfolio in crypto holdings, including XLM. They are finance-savvy but risk averse and uncomfortable navigating DeFi applications.  

What these Funds Will be Used For: If accepted into the Stellar Community Fund program, we will use the funds to build out the necessary infrastructure required to accept XLM as collateral for USD loans, including the auto-liquidation functionality which is critical to protect Lantern from defaulting borrowers. Any residual funds will be used to help fund the loans requested by our clients. 

As we continue to expand our product offering, we hope to become the most trusted & primary lending of choice for XLM users looking to borrow dollars against their holdings.

Jung Won Kim - CEO:

• Education: Cornell University, Economics
• Professional Experience: Leveraged Finance @ Capital One & SVB
• Crypto Background: Super-early power user of crypto lending platforms
• Linkedin: https://www.linkedin.com/in/jungwonkim/ 
• Twitter: https://twitter.com/jungwonkim312

Prince Jindal - COO: 

• Education: George Mason University, Finance & Accounting
• Professional Experience: Founded MetaYield, a crypto credit fund
• Crypto Background: Early ETH Staking user, pre-Beacon Chain
• Linkedin: https://www.linkedin.com/in/princejindal1/