Crypto Lending! The Killer Dapp Of The Sharing-Economy? BNB, NEXO, CEL
Lending with crypto...
Banks have been controlling humanity for centuries, ever since the first bank was founded in Italy they took control of our money, our finances! Bankers are usually stereotyped as being rich fat men always wearing a suit and tie, and they are... they are rich, and this has a lot to do with their lending business.
What Banks do at the moment is lending your money, yes, you read that right, YOUR MONEY, that you deposit in the bank, they lend it to people that need it expecting that, with time, those same people will pay their loan plus interest, that interest is then divided between the bank and the depositors...
The issue is that in the current financial system banks keep a large portion of the interest for themselves and almost don't share any of the profits, some banks only share 5% of their profits! That's god awful! But everything is about to change!
You can now earn interest on your crypto!
There are many current platforms that allow you to earn interest on your crypto, some of them worse than others, some are not as trustworthy, some of them still need to carve their place in this space, but I'll quickly mention some...
Nexo.io
Starting with nexo.io, it was my first interest platform and has a cryptocurrency too. An offspring of Certissimo, a bank that first appeared after the 2008 crisis, nexo.io is a platform that allows one to deposit their cryptocurrencies and earn interest on them, it also allows one to take out loans collateralized by their crypto deposits.
If you want to take out a loan you need to have twice the amount of crypto locked up on the platform, if, for any reason, the price of the crypto that is backing up your loan diminishes to the point where your loan isn't backed up by the asset you have on your platform, your assets are automatically liquidated to pay for the loan.
NEXO, the cryptocurrency, is a security, and it was launched as a security, every few months the platform does a buyback of NEXO with 30% of their profits and distributes it to the NEXO hodlers, the more NEXO you have on the platform and the longer that NEXO was on the platform the more NEXO you will earn. This buyback system allows a compound growth and a token price increase (after the weak hands are shaken out) that I like in my cryptos.
But like all things, nexo.io also has its bad things, lack of team communication, no audits so far, but they say they are going to have one soon, lack of transparency with their assets vs loans...
All-in-all, doing the math, for the buybacks they are doing the token is really undervalued, with the dividend amount they are sharing with NEXO hodlers the market cap should be much higher!
Celsius
This is my favorite, the creator of this amazing platform is Alex Mashinsky, the creator of VOIP(Voice over the internet protocol), the guy that fought against the big corporations that didn't want to implement Wi-fi in the New York Metro system, even going so far as paying from his own pocket for the things needed.
He likes fighting big corporation and giving the middle finger to big monopolies, and this is what he is doing with Celsius, giving the middle finger to the banks that share almost none of the profits with their depositors! He is doing this with what he calls MOIP (money over the internet protocol) also known as Crypto.
Celsius shares 80% of their revenue with their depositors, which makes sense for the sharing-economy that the world is moving toward. It's an interest focused platform, their interest rates aren't stable, they never promise a fixed return, they only promise 80% of their revenue to be shared, so the interest rates change a lot...
They have their own token, CEL, which also allows interest to be earned and even increases the amount of interest earned on the other crypto deposits... you can also get paid all the interest in CEL. So, while nexo.io makes sure to pump the token, Celsius puts the mechanisms on the platform that incentivize the token to pump. They are also very honest and transparent with their loans and assets.
Both Celsius and nexo.io have wallets on Bitgo, each wallet is insured up to 100 Million USD.
Of course, just like nexo.io, they also have issues, but while nexo.io has almost no communication with the community and is very "separated" from the community probably because of their banking background, the Celsius team is very communicative and tries to implement as many systems and mechanics as they can to please the community, so, all issues will probably be fixed in the future.
Binace and BNB- The new kid on the block
Not much information has been released and I haven't done enough research into this one, so I'll keep this short since it is so new and without track record. Binace is going to implement an interest mechanics where people can loan their BNB to margin traders, BNB lenders can earn up to 15% on their BNB.
The news was just released yesterday, and there isn't enough information about the system, I trust binance and I trust CZ, which increases my confidence in this system, but I'll need further information to see how the whole system is going to work. Ever since they changed BNB from a fee buyback and burn system to a no buyback system without warning I lost a lot of trust in BNB.
There are some others platforms and cryptos that I haven't done enough research about, like MCO, compound.finance (which allow decentralized loaning), ETHlend, SALTlending, Blockfi, etc... which might be worth looking at in the future.
To sum it up, lending seems to be increasing in the crypto world, this might be one of the killer apps that we've been looking for.. the lending business makes banks billions of dollars worldwide, it's time we take back some of that power back and earn with it! Even though I have my favorites, diversification is always good, I wouldn't put all my eggs in one only basket, same with my investments, same with my deposits and same with lending platforms, diversify between the ones you trust and always do your own research.
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Question of the day: What other lending platforms do you know about? What is your favorite and why?
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Interesting post, my next to investigate on the list is Celcius.
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Celsius is really good... I find the team and project awesome! I could go into deeper detail about the project but I'll leave it for another post.
If you like Celsius you should really go watch some of his interviews on youtube, especially the one against nouriel!
What do you think about BNB lending BTW? From all I can gather, I think that BNB marketcap is way to overvalued and I would rather go for some of the underdogs like NEXO and Celsius... NEXO dividend was worth 12%, which is something really uncommon in the stock market, only companies near bankruptcy give out dividends like that, but since NEXO is a crypto and not a company I think it just shows how undervalued it is, it should be 2x the marketcap, or 3x...
BNB is a big player in the crypto sphere, and I believe they are here to stay. If they decide to expand in the lending business, it can be a good option on the table.
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There have been a few platforms that have popped up for person to person lending that are sketchy AF. But, it is a major need that has enriched these massive lenders. It's important that we figure out a way to put that power, and money, back into the hands of the people. Because it's their money that the banks are using to lend with.
I'd like to see something a bit closer to normal banks though, where you can keep money in an account, either as a particular currency, or a digital currency, and then just get paid in interest for money made from lending it out, as well as being able to appeal for loans.
Both nexo and celsius work a lot like that, you can get around 10% interest on stablecoins(USDC, for example), or 4%-5% on non-stablecoin, you can get a loan with that crypto too. So far, from all platforms I've seen, those two are the best, Alex from Celsius is the creator of VOIP and he is a really great upstanding guy, and NEXO has a bank behind, so they are trustworthy.
I'm spliting a portion my crypto between both, better safe than sorry.
The way you explained how Nexo does it's lending, it's nothing like standard banks. But, they likely do that for security reasons. Don't wanna lose a bunch of money out to someone that just fooled them into thinking they have more assets than they do somehow. It of course means that you can only borrow out what you can cover in crypto. That has a use case of course. It means that us crazies can have more assets in crypto and borrow some out for normal expenses without spending it.
Celsius, I wasn't quite so sure about, how it works.
Of course, I'll have to do my own research. I guess either would probably be useful for the crypto assets I have possibly.
Well, true, it's not exactly like standard banks, but if you think about it, if we are able to tokenize everything, we can put any token on the platform and ask for a loan... imagine, a tokenized house that you deposit on the NEXO platform and you ask a loan with that house as collateral ! It's actually quite amazing if you think about it... Ofc, it has its risks, we are still very early into crypto and into a tokenized world, but I can sort of see how the future might be.
Ofc DYOR, imho both are good bets, Celsius is still beginning but they are moving really fast and they intend to be very community-friendly.
Thanks for reading :)
Yeah, I look forward to the future, with new things related to this, and whatever these things eventually become. Hopefully they won't stagnate, and will keep moving forward and getting better.
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