InLock ICO: What is the Fastest Way to get a Crypto-Secured Loan?


The author of the column is Alexander Savinkin, our investment expert and co-founder of Howtotoken. It’s #icobusted, where we scan the market for the newest and most remarkable upcoming ICOs and analyze them in-depth, with a focus on the viability of the business concepts behind these projects. This won’t concern pre-ICO/ICO price gaps, no gasps and groans about the team, and no code checking. Here, we will try to break everything down to see if there are any market prospects for the product if, and only if, that product can be delivered.

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InLock promises to manage short-term liquidity problems by taking out a loan and using client’s existing cryptocurrencies as collateral. So is InLock a one of a kind?


Basically, InLock is a platform for people to get loans really fast by leaving collateral behind in the form of their crypto assets. In fact, the specifics of the industry make it more of an asset-based loan (ABL) platform where you can leave your cryptocurrency as collateral to make fast fiat and get the asset back later with interest paid. Some crypto investors might experience an urgent need in fiat, while not wanting to part with their cryptocurrency for good. This creates opportunities for P2P lending with low risk on the investor side.

The process of lending could be described with a simple example:

  1. You need to get cash for some urgent financial operation, so you approach InLock, and they gave you the general lending conditions.
  2. If you agree, then InLock informs you about the lenders that could provide you with needed sum and their conditions. You pick the lender most suitable to your needs.
  3. When both sides come to an agreement, the contract is sealed and your cryptocurrency is being sent to the special crypto wallet while you get the cash.
  4. When you’re ready to get your crypto back (or just the contract time is up), you return your loan with interest.

It’s as simple as that.

The complication comes in the form of loan-to-value (the ratio of a loan to the value of an asset pledged). You can typically loan almost as much as your collateral is assessed (collateral minimum size is 105% from the loan), but once collateral gets below 102% (like when your collateral gets closer to the loan sum in case of your actives becoming cheaper) then your contract will automatically be terminated and collateral will be distributed between lenders. This is called the “average termination level” and can vary from contract to contract. This covers their potential expenses of lenders and prevents any volatility risks they might face. So the borrower is the one that faces the risks, and lenders deal with zero profits in the worst case scenario.

The platform ecosystem is supported by special experts (with a licence to provide exchange activities or a similar level of  status) called “collateral managers,” who secure crypto wallets with collateral (including its assessment) and terminate the contract if they find any substantial risks for the lenders.There is also a matchmaking service provider that assists lenders and borrowers in finding each other. This architecture could be used not only to support ABLs but to leverage lending as well, which gives way to additional market volume possibilities.

From a technical aspect, the platform is using it’s own ILK token released under the ERC20 standard. ILK tokens represent compensation for the resources used. This means that the collateral could be withdrawn if needed by the borrower and that the system is foolproof to many machinations that may arise. The credibility of the assets provided for collateral is being monitored by the platform itself, so this creates a  system that any investor could use without much of a risk. There are also consensus reaching mechanisms involved that control the state of the lending contract. They also provide a termination procedure that gives users back their funds in the form of collateral if needed. Overall, the product is built around ABL, so all of the expected features are included.


In the traditional global stock market, the volume of asset-based lending (ABL) was rated at $83 billion in 2017. With global stock market capitalization hitting $23.14 trillion this year, ABL makes about 0.4% out of the stock market cap. With that ratio in mind we can make the assumption that this will stay true to the crypto world, and with market cap of $200 billion dollars, the crypto ABL market could be estimated to be at $800 million dollars. With the average total platform fees being close to 1% or lower, the total market revenue could be estimated at about $8 million, which is not that high of a share between the number of players.

Actually, InLock is not the first product to come to this market. For a several months now, its predecessor,  Coindex, has been functioning in the open but with no particular success (trading cash flows are miniscule) . There are also several other projects like Salt and ETHlend that have already held ICOs. Salt`s market cap is about $27 million and ETHlend has about a $11 million cap (data from Brotherylend is one of the projects just starting their ICO (already $2 million in investments)  and they would be one of the main “new” competitors for InLock when it will be released.

So is a $27.5 million InLock hard cap a lot or a little? Let’s make some rough calculations real quick. InLock’s average total fee is about 1% from the value of the collateral. The very crude guess about the average frequency of using such a service could be estimated at 10 times per year, in an optimistic scenario (our approach to comparing token turnover ratios with the method of working capital turnover ratio is described in more detail in our previous article TrustedCar Flex ICO). So let’s take 150% as the average percentage of collateral to loan.

To form the operational demand for $27.5 million in InLock tokens, we need the amount of loans provided about as much as $27.5 million / 150% / 1%  / 10 = approximately $180 million. That is almost a quarter of our estimation of the entire crypto ABL market. It is a rather attainable goal for the near future. But if you want x5 for InLock token price then InLock has to beat all of its rivals to the ground, or the crypto market cap has to make x5 as much.


Pros and cons:

(+) Solid niche segment with the potential for growth
(+) No outstanding leader in the sector
(+) Specialized niche solution, while others try to diversify their services. That specialization could very well pay off
(-) Some already existing rivals to provide crypto asset-based lending
(-) Relatively small revenue base considering all of the rivals at this market stage
(-) Not that innovative to distinguish itself  from competitors

Although InLock is not something groundbreaking,  it’s well-thought-out enough to compete as an equal with other projects in the growing market. We suppose that InLock is worth further consideration in the context of long-term market prospects.

Useful resources:

  1. STRATEGIC MARKET INSIGHTS by  PNC’S advisory and speciality businesses  
  3. How Blockchain Based Lending Could Take Us From Billions to Trillions by Ben Sprango
  4. State of the ABL Market 2018: Opportunities and Challenges For Lenders by Seth E. Jacobson and David M. Wagener

All materials on this site are for informational purposes only. None of the material should be interpreted as investment advice.