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Blockchain projects have been exploring the opportunity to decentralize the lending markets for some time. In theory, such a development would benefit everyone consumer, but putting this into effect is difficult. 

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Banks are the middlemen of the financial industry and they manage the vast portion of the lending market. They collect money from the savers and provide it to the borrowers, with fees attached on both ends. In return for these fees, the banks bring governance to the structure, ensuring the risk is managed and that the institution does not default on its functioning. 

In many countries, governments have also provided guarantees and ensure that savers’ money will be insured through federal agencies. 

**A p2p lending ecosystem will have to function without these benefits.** 

The reality remains that not everyone is educated enough to be a lender; they may not be able to properly manage the risk and they may not be able to abide by laws properly. Additionally, a p2p lending market would face rampant issues from borrowers aiming to exit with fund they owe, with no intent of ever returning the money. 

<center><h1>Collateralized Loans and Validated Participants</h1></center>
A new project aims to utilize the blockchain to offer an ecosystem of p2p financial engagements where the participants will have to be validated. 

Vena Nodes must provide proof of knowledge needed to handle lending. Additionally, they will have to stake VENA tokens to be able to take up the role. This ensures that they do not misuse their position as a collapse in the network will cause the value of their staked tokens to collapse as-well. 

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**Vena Network creates a form of p2p market where anyone can take up the role of a lender, if they prove to be qualified.** Anyone can dedicate his or her efforts to acquiring the knowledge and tokens needed to be a lender.  This distinguishes Vena Network from other projects that attempted to develop a p2p lending market; past projects with such a goal aimed to allow anyone to lend but this is not feasible. Vena Network narrows down the qualification pool to those who can handle the responsibility. 

# Importance of Collateral 
A lending market does not face just moral hazard from lenders; the greatest threat comes from faulty borrowers. Vena Network accounts for the probability of borrowers attempting to exit with funds. In order to prevent this, the system provides collateralized loans. This distinguishes Vena Network from other projects building p2p lending markets as Vena accounts for the fact that greed and trust do not mix well. 

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Thus, Vena Network will ask borrowers to place a collateral. *A collateral is something of value provided in return for a loan.* A collateral removes the incentive to exit with funds as the collateral will be claimed by the borrower. Thus, Vena Network recognizes that p2p lending can successfully work with collateralized loans. 

While past p2p lending markets failed to attract a supply of lenders, Neva Network has taken the measures to not fall into this problem. If lenders can have a collateral warranty, the risk of borrowers exiting with funds is extremely low. With the added benefit of them earning interest returns far greater than the morsels banks provide to them in savings accounts, Vena Network’s lending market should be sufficiently able to attract lenders.  

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**Wrap-Up:** Banks exist to ensure the lending markets are handled properly. A p2p lending ecosystem needs to account for moral hazard and faulty borrowers. 

Vena Network ensures only qualified nodes can lend money and that any borrower places a collateral in return for a loan. 

<center><h1>Essential Links</h1></center>
🌐 Website: http://vena.network/en 
💡 Whitepaper: http://whitepaper-en.vena.network/ 
💻 Telegram: https://t.me/vena_network 

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