Smart contract-managed decentralized lending processes using collateral tokens

Abstract

A loan process smart contract manages a collateralized loan process for a loan against a collateralized item, the collateralized loan process includes tokenizing and locking a collateral token that tokenizes the collateral item, monitoring terms of the loan, and detecting an unlocking event of the loan for unlocking the collateral token. Locking the collateral token is facilitated by use of a distributed ledger with a plurality of accounts including a user account and a locked collateral token escrow account.

What is claimed is: 
     
         1 . A method comprising:
 receiving, by one or more processing devices, a request to initiate a loan process from a user device, the request indicating a collateral item of a borrower;   executing, by the one or more processing devices, a loan process smart contract instance that includes computer-readable instructions that are configured to manage a loan process in accordance with a loan process workflow, wherein the loan process smart contract instance is configured to:
 execute the loan process workflow, wherein the loan process workflow includes:
 initiating tokenization of the collateral item, wherein tokenization of the collateral item includes: 
 generating a virtual representation of the collateral item, wherein the virtual representation includes at least one of a description of the collateral item and one or more media contents that respectively depict at least a portion of the collateral item; 
 generating, by the one or more processing devices, a collateral token corresponding to the collateral item that is cryptographically linked to the virtual representation of the item, wherein the collateral token is a digital token that is stored on a distributed ledger and is redeemable for the collateral item; and 
 assigning the collateral token to a first user account of the borrower on the distributed ledger; and 
 receiving, by the one or more processing devices, a loan agreement notification indicating one or more loan term parameters of a loan agreement that was agreed to by a lender and the borrower, wherein the loan term parameters include a loan repayment amount and a set of unlocking events, wherein the set of unlocking events include a loan repayment event that defines a first set of electronically verifiable conditions that must be met to determine that the loan has been fully repaid and a loan default event that defines a second set of electronically verifiable conditions that must be met to determine that the borrower has defaulted on the loan; 
 
   locking, by the one or more processing devices, the collateral token by assigning the collateral token from the first user account to an escrow account on the distributed ledger, the collateral token remaining assigned to the escrow account until an unlocking event of the set of unlocking events is detected, whereby the collateral token is prevented from being redeemed or assigned to another account while the collateral token remains locked in the escrow account;   monitoring, by the one or more processing devices, a repayment status of the loan in accordance with the loan term parameters to detect an occurrence of any of the set of unlocking events;   in response to detecting an occurrence of the loan repayment event, unlocking, by the one or more processing devices, the collateral token and assigning the token to the first user account of the borrower; and   in response to detecting an occurrence of the loan default event, unlocking, by the one or more processing devices, the collateral token and initiating a loan default workflow.   
     
     
         2 . The method of  claim 1 , wherein the collateral token includes a collateral token smart contract wrapper that comprises executable instructions that define conditional logic relating to redemption of the collateral token and transfers of the collateral token. 
     
     
         3 . The method of  claim 2 , wherein the executable instructions of the collateral token smart contract wrapper are configured to:
 receive a redemption request from a user device of a redeeming user to redeem the collateral token;   determine whether the collateral token is assigned to a user account of the redeeming user on the distributed ledger;   in response to confirming that the collateral token is assigned to the user account of the redeeming user, issue a redemption notification to a safekeeper of the collateral item; and   in response to receiving a verification from a device of the safekeeper that the collateral item has been successfully redeemed by the redeeming user, burn the collateral token.   
     
     
         4 . The method of  claim 1 , wherein the loan smart contract instance is further configured to monitor the repayment status of the loan during a repayment period defined in accordance with the loan parameters to detect an occurrence of a loan repayment event or a loan default event. 
     
     
         5 . The method of  claim 4 , wherein the loan smart contract instance is further configured to unlock the collateral token in response to detecting the loan repayment event and to initiate assigning of the collateral token to the user account of the borrower, such that the collateral token is redeemable by the borrower to take possession of the collateral item. 
     
     
         6 . The method of  claim 4 , wherein the loan smart contract instance is further configured to unlock the collateral token and initiate the loan default workflow in response to detecting the loan default event. 
     
     
         7 . The method of  claim 4 , wherein to monitor the repayment status includes: receiving electronic payment event notifications indicating loan payment events and to determine the repayment status of the loan based on the payment event notifications. 
     
     
         8 . The method of  claim 7 , wherein the loan parameters include a loan amount, a loan term, a loan repayment amount, an interest rate, late fee penalties, and one or more default condition definitions. 
     
     
         9 . The method of  claim 7 , wherein the loan smart contract instance is configured to generate a repayment schedule based on one or more of the loan parameters. 
     
     
         10 . The method of  claim 9 , wherein the loan smart contract instance executes an event listening thread that listens for the payment event notifications indicating loan payment events corresponding to the loan. 
     
     
         11 . The method of  claim 10 , wherein the payment event notifications indicate a respective amount paid and a respective timestamp. 
     
     
         12 . The method of  claim 11 , wherein the loan smart contract instance is configured to determine whether a loan default condition exists based on the repayment schedule and any received event payment notifications. 
     
     
         13 . The method of  claim 4 , wherein the loan smart contract instance is configured to lock the collateral token and to facilitate a transfer of a loan amount from a lender account of the lender on a distributed ledger to the user account of the borrower on the distributed ledger in response to the loan process smart contract instance receiving the loan agreement notification. 
     
     
         14 . The method of  claim 1 , wherein the loan process workflow includes initiating a smart contract-managed authentication task where the collateral item is authenticated by one or more authenticators. 
     
     
         15 . The method of  claim 14 , wherein initiating the smart contract-managed authentication task includes:
 instantiating an authentication task smart contract corresponding to the loan process workflow, wherein the authentication task smart contract is configured to receive an authentication report from an authenticator assigned to the authentication task, wherein the loan process workflow is selectively advanced to a next loan process workflow stage based on the authentication report.   
     
     
         16 . The method of  claim 1 , wherein the loan process workflow includes initiating a smart contract-managed appraisal task where the collateral item is appraised by one or more appraisers. 
     
     
         17 . The method of  claim 16 , wherein initiating the smart contract-managed appraisal task includes:
 instantiating an appraisal task smart contract corresponding to the loan process workflow, wherein the appraisal task smart contract is configured to receive an appraisal report from an appraiser assigned to the appraisal task that indicates an appraised value of the collateral item, wherein the loan process workflow is selectively advanced to a next loan process workflow stage based on the appraisal report.   
     
     
         18 . The method of  claim 1 , wherein the loan process workflow includes initiating a smart contract-managed safekeeping task that electronically verifies that the collateral item is properly kept by a safekeeper, such that the safekeeper releases the collateral item to a redeemer of the token once the collateral item is unlocked. 
     
     
         19 . The method of  claim 16 , wherein initiating the smart contract-managed appraisal task includes:
 instantiating a safekeeping smart contract corresponding to the loan process workflow, wherein the safekeeping smart contract is configured to receive a safekeeping report from a safekeeper assigned to the safekeeping task that indicates that the collateral item is securely stored in a safekeeping facility, wherein the loan process workflow is selectively advanced to a next loan process workflow stage based on the safekeeping report.   
     
     
         20 . The method of  claim 1 , wherein the loan process smart contract instance locks the collateral token in the escrow account on the distributed ledger. 
     
     
         21 . The method of  claim 20 , wherein in response to being locked, the collateral token is unredeemable by the borrower until the loan process smart contract verifies that the loan has been successfully repaid. 
     
     
         22 . The method of  claim 1 , wherein the loan process smart contract instance is executed at by a set of node devices that store the distributed ledger.