SALT - a great new idea? Lending ICO
couple of days ago I discovered SALT. And I am totally excited about it!
SALT lets you leverage your blockchain assets to secure cash loans. We make it easy to get money without having to sell your favorite investment*.
- So what is the idea behind SALT?
The idea of SALT (secured automated lending technology) is, to actually hold cryptocurrency in their "next generation lending platform for blockchain-backed loans", as they mention on their website and give loans to borrowers based on them. So that means, SALT will allow members to leverage assets like bitcoin and ether for loan collateral.* So you can give your assets and get real money (loan) from them.
Ex.: Imagine you sell all your Bitcoin to afford a car. A year later you realize how much more your Bitcoin would be by now and you regret the loss of all the money you could have made by holding on to your Bitcoin. With putting your coins on a SALT wallet, you get cash and you are still owning your crypto, you just lent it to them.
- How does it work?
a) Loan Creation: a borrower sets up a membership account and then forwards their collateral to the SALT Oracle Wallet. This is a multi-signature blockchain wallet that functions as a repository for collateral while automatically managing the lending terms.
b) The loan funds, once approved, are transferred to the borrower’s bank account.
c) Loan Repayment: a borrower makes timely, periodic payments to the lender.
d) Loan Completion: upon repayment of the loan, the borrower will have their collateral returned.*
- Whats good about it?
a) The process is really easy. You put your cryptocurrency into a wallet and get cash. They care only about your cryptoportfolio and your ability to pay for it. So you can use the value (in $) of your coins and still "posess" them
b) It makes borrowing much faster, because they can rely on your assets. They simply do not care about your creditworthinessor check your credit scores. And you don't have to worry about loosing money by selling your Bitcoins.
b) The interest rates are very low, because they feel secure as they possess your blockchain assets in case you can't pay back your loan.
c) You can always get your assets back. If you need your coins back, you can simply cancel and get your coins back.
d) You don't have to worry how to do lend your crypto out. They do it for you and help you out with it.
- Do I get my coins back?
According to youtube, you might get it back every time you want. But as it is mentioned on bitcoinamgezine.com, you will get back your collateral (collateral is a property or other asset that a borrower offers as a way for a lender to secure the loan) as soon as you paid back your loans.
- Who will participate?
They say, that this whole idea is for private lenders and borrowers as well as for big companies and businesses as the platform will simplify the application process of a borrower which is based on his blockchain assets, not on his credit scores.
- Do lenders have to have blockchain assets?
According to their website, only a accredited investors and qualified financial institutions can be a lender. They go through a process where they have to meet SALT’s suitability requirements (Lenders on the SALT Platform are carefully screened. All of our lenders are Accredited Investors under Regulation D of 17 CFR § 230.501 et seq., who have passed the SALT Lending Suitability Test)
- Can I always sell my blockchain assets (crypto), even when they're still on SALTs platform?
According to their website, you still own your asset and you can sell it at anytime. In case you didn't pay all your loans back, SALT will simply take it from your asset and give it back to the lender, before they give back to you your assets (which may now be a little less in value, but you also don't have to pay back any loans anymore).
- What if my assets change in value?
You have several options to deal with this condition. You can get more loan, in case the value of your coins rises, or you can just leave them on the platform and enjoy the rise. In case it drops enough to not be the same amount as your loans, SALT will contact you and offer you two options. a) you give them more assets so it equals the loans you took or you make additional payments. (I'm not sure what happens if your assets become less valuable and you are incapable of paying back anything).
- Where will my assets be stored?
s mentioned before, they will be stored in a so called "highly secure multi - signature wallet". The private keys will be possessed by the borrower, the lender, the SALT (Secured Automated Lending Technology) and a third party.
- What is the interest rate?
This depends on the lender. The interest rate is approved by the borrower by accepting the lending agreements.
So I hope you now know a little bit more about SALT.
I am quite new to all this business, but posting about it helps me dig deeper to understand it better. In case anything is wrong in this blog, please comment! Thanks
Sources
*https://bitcoinmagazine.com/articles/salt-enables-traditional-lending-secured-cryptocurrency/
*https://saltlending.zendesk.com/hc/en-us (FAQ)