DecentraLend: A Blockchain-based Monetization for Decentralized Lending System

Abstract

Borrowing or lending goods or tools is commonly based on the centralized distribution in which the transaction of items generally occurs from an owner to a borrower. This centralized system may reduce the reachability of an item to potential borrowers, hinder the opportunity for the borrower to choose better alternatives, and increase the cost of distribution for an owner. In this paper, we proposed a novel decentralized virtual lending system based on blockchain to overcome the above limitations of a centralized lending system that allows any owner to monetize their items in possession. Our proposed system enables any possessor of an item to become a distributor by creating a chain of possessors from the owner through every borrower. On the other hand, the system incorporated a recommendation mechanism to suggest the best alternatives for an item based on a cost model that considers the borrowing fee, security deposit, gas, and distribution and return costs. To reduce the cost of gas and overall running time, we adopt a hybrid implementation of blockchain and RDBMS for storing the data and transactional information. Experimental results show that our hybrid approach can minimize gas usage significantly and reduce the running time by two orders of magnitude compared to a blockchain-only approach.