Techniques for digital token-based collaralization and lending
In embodiments of the present invention, methods are provided for receiving a request to collateralize a collateral item of a user seeking a loan, along with information and a photograph of the collateral item. A processing system may generate a virtual representation of the collateral item based on the information and photograph and generate a digital token based on the virtual representation. Ownership of the digital token may be assigned to the user seeking the loan and an instance of a smart contract governing the loan may be generated and deployed, the instance of the smart contract indicating an amount to be paid back by the user to the lender and one or more conditions that cause ownership of the digital token to be transferred to the lender.
1. A method comprising:
receiving, by a processing system, a request to collateralize a collateral item of a user seeking a loan, the collateral item comprising a unique physical asset;
receiving, by the processing system, one or more photographs of the collateral item;
receiving, by the processing system, item information relating to the collateral item, the item information including a description of the collateral item and an appraisal value of the collateral item;
receiving, by the processing system, a holding location of the collateral item, the holding location corresponding to a safekeeping facility in which the collateral item is stored;
generating, by the processing system, a virtual representation of the collateral item based on the one or more photographs, the item information, and the holding location;
generating, by the processing system, a non-fungible digital token based on the virtual representation, the non-fungible digital token being redeemable for the collateral item in order to receive possession of the collateral item from the safekeeping facility;
assigning, by the processing system, ownership of the non-fungible digital token to the user seeking the loan;
receiving, by the processing system, an agreement to lend a defined amount of funds to the user by a lender using the collateral item as collateral;
generating, by the processing system, an instance of a smart contract governing the loan, the instance of the smart contract indicating an amount to be paid back by the user to the lender and one or more conditions that cause ownership of the non-fungible digital token to be transferred to the lender; and
deploying, by the processing system, the instance of the smart contract to a set of one or more computing devices that execute the instance of the smart contract, wherein deploying the instance of the smart contract comprises transferring ownership of the non-fungible digital token from the user seeking the loan to the instance of the smart contract.
2. The method of claim 1 , wherein the smart contract initiates the transfer of the non-fungible digital token to an account of the lender upon determining that the user is in default of the loan.
3. The method of claim 1 , further comprising:
transferring, by the processing system, the non-fungible digital token into an escrow account until the loan is determined to be paid or in default;
upon determining that the loan is paid off, transferring, by the processing system, the non-fungible digital token to an account of the user; and
upon determining that the loan is in default, transferring, by the processing system, the non-fungible digital token to an account of the lender.
4. The method of claim 1 , wherein the loan is transferrable to another lender.
5. The method of claim 1 , further comprising:
receiving, by the processing system, a request to transfer the loan to a second lender;
determining, by the smart contract, whether the second lender has paid a remaining balance on the loan to the lender; and
upon determining that the second lender has paid the remaining balance of the loan to the lender, initiating, by the smart contract, generating of a new instance of the smart contract indicating new terms of the loan and indicating one or more new conditions that cause the non-fungible digital token to be transferred to the new lender.
6. The method of claim 1 , further comprising requesting an authentication of the collateral item from one or more verified subject matter experts, wherein the request includes the photographs of the collateral item and the item information.
7. The method of claim 6 , further comprising receiving an authentication report of the collateral item from a verified subject matter expert.
8. The method of claim 6 , further comprising training a machine learned model based on the authentication report and the virtual representation of the collateral item.
9. The method of claim 1 , wherein the item information includes a weight of the collateral item.
10. The method of claim 1 , wherein the item information includes dimensions of the collateral item.
11. The method of claim 1 , further comprising requesting an appraisal of the collateral item from one or more verified subject matter experts.
12. The method of claim 1 , wherein the instance of the smart contract is deployed to a distributed ledger.
13. The method of claim 12 , wherein the instance of the smart contract locks the non-fungible digital token until the loan is fully paid or determined to be in default.
14. The method of claim 13 , wherein the instance of the smart contract includes a listening thread that listens for payments made by the user in repayment of the loan in accordance with a loan schedule.
15. The method of claim 14 , wherein the instance of the smart contract is configured to determine whether the loan is fully repaid or in default based on the listening thread and the loan schedule.
16. The method of claim 13 , wherein the instance of the smart contract unlocks the non-fungible digital token upon determining that the loan is fully repaid or in default.
17. The method of claim 16 , wherein the distributed ledger maintains ownership data of the non-fungible digital token and the instance of the smart contract updates the ownership data of the non-fungible digital token on the distributed ledger in response to unlocking the non-fungible token based on whether the loan is fully repaid or in default.
18. The method of claim 16 , wherein the non-fungible digital token is redeemable to take possession of the collateral item only after the non-fungible digital token has been unlocked.
19. The method of claim 12 , wherein the distributed ledger is a blockchain.
20. The method of claim 19 , wherein the blockchain is a public blockchain.
21. The method of claim 19 , wherein the distributed ledger is a private blockchain.