Web3 Hackathon: Lending with LoanMarket

In March, we dove into the Web3 Hackathon without an inkling of what was to come. We didn't have any idea what we wanted to build, despite having had access to the prompts for at least a week. We knew we were interested in governance, the largest category prize at the event, but we didn't know how to get there. Amongst us we had very little knowledge of the crypto space, and even less experience with the technology. Not a single member had deployed a smart contract before, and we had no idea how to get started. We were all very much in the dark.

Friday evening, we disappeared to an after-work drinks event with Watchful, a local software company that both Connor and Walt worked for, and Jasper had previously worked for. When we returned to the venue, around 9pm, we were still as lost about what we wanted to build.

Usually in a hackathon, the first night is spent brainstorming ideas, and then the second day is spent building. Deciding what you're going to make on the first night is paramount to having the time to deliver. We did not achieve this.

We returned Saturday morning, and after a few hours of brainstorming, we finally settled on an idea. We were going to solve bringing off-chain identity (digital credentials, in this case W3C Verifiable Credentials) on chain during a transaction as a means of ensuring single person voting power in a governance system. I had morning plans that day, so I left the team to it. When I returned, carrying a plant ("Janine"), I arrived to find the idea had changed. We were now going to build a lending platform, which would allow users to submit their KYC/AML documents once, and then use them across multiple lenders. This was a much more achievable goal, and one that I was much more excited about.

With less than 18 hours until the deadline, we had a new idea, a two new team members (Janine and Danuka), and a lot of work to do.

The Challenge we're solving

Traditional lending often feels like a bureaucratic maze—loan approvals dragging for weeks, each bank performing its own checks. LoanMarket set out to cut through this inefficiency. By marrying DeFi's speed with traditional banking's compliance, we aimed to fast-track loan processes across providers.

Building LoanMarket

Our platform automates compliance using a single verification process shared with all potential lenders. Engaging a trusted third party to verify documents, LoanMarket distributes accurate claims, enabling multiple providers to offer loans simultaneously.

Tech Stack

• Frontend: Built with React, TypeScript, and Tailwind for a sleek, SPA interface.
• Backend: Developed in NodeJS with Fastify and PostgreSQL, hosted on a Homelab.
• Smart Contracts: Deployed on Sepolia using Hardhat for our blockchain operations.

How It Works

1. User Request: Users submit KYC/AML documents via the frontend.
2. Data Storage: Documents are encrypted and stored in PostgreSQL with a signature recorded on-chain.
3. Verification: A trusted third party verifies documents and issues a verifiable credential (JWT) with claims such as whether the borrower meets an income threshold.
4. Loan Offers: This credential is shared with registered providers, who evaluate and return loan offers.
5. Aggregation: The backend compiles these offers and presents them to the user. The frontend enables users to use the credential for on-chain transactions, ensuring smart contract verification and execution.

Loan providers maintain autonomy with their own smart contracts, allowing them to revoke LoanMarket's authority if needed.

Winning?

Very few of us slept that night. I had a few hours of sleep, but Danuka didn't sleep at all. We were all exhausted, but we had a working demo, and we were more or less ready to present.

Sunday was spent watching the other teams present. There were some incredible ideas, projects, and demonstrations. I was blown away by the quality of the work that was produced in such a short time. When judging concluded, we were all very surprised to win the "Best Overall Web3 Solution" award. Along with a cash prize issued in NZDD, we also received flights and accommodation to attend an Ethglobal hackathon of our choice. You'll be hearing more about our trip to Ethglobal NYC when it happens in August.