Borrowing & Lending FAQ
Last updated
Last updated
As to the nature of the loans, we will have several different types of loans for different types of borrowers. As a basis for crypto to fiat loans, you will need to have twice the amount of crypto as you will borrow in fiat. If you collateralize $100k in BTC, then you can borrow $50k in USD. But we also have crypto-to-crypto loan types that let you borrow 90% of the collateral value depending on the risk profile of the asset. Our focus is to provide a low-risk model because we want to minimize possible liquidations of customer positions.
On systems like ours, users can borrow less than their collateral value, so if they keep repeating the process, they keep borrowing less and less until their loan is not meaningful anymore. And many debt positions with interest aren't fun, way less efficient than one single position. Buying crypto with fiat and most other operations have transaction fees as well.
No, this is not a P2P lending model. Fiat liquidity providers (lenders) deposit their fiat into a lending pool for borrowers to borrow against. Borrowers pay back to the lending pool, and if their collateral gets way undervalue and gets liquidated to fiat, that fiat also goes to the lending pool. When a lender withdraws back their fiat investment with interest/yield it is also from the lending pool. Your collateralized crypto position should not be affected by anything but the market price of that crypto.
The APY for the liquidity pools depends on the demand for their underlying asset. We'll announce more safe estimations as we have more stats to analyze, our economics model progresses more, and above all, simulating it aggressively against the testnet.
MELD provides a fast, safe, and transparent set of tools for all participants to lend and borrow in the DeFi ecosystem. Borrowers receive fiat currency via wire transfer directly into their account for crypto-backed loans or gain access to a line of credit utilized by the MELD debit card, after depositing their crypto.
To obtain a loan with MELD, users must first download the MELDapp or go to , create a wallet, and fill out all necessary KYC/AML procedures (if desiring a fiat loan, crypto loans require no KYC). Then, users can deposit their crypto assets directly to the MELDapp. This will instantly start generating yield for the asset provided and provide the user with the ability to borrow other tokens. The protocol requires deposited crypto assets before being eligible as collateral for a crypto-backed loan, or a line of credit.
There is no minimum to the loan and the maximum loan amount is the average loan-to-value ratio of the deposited crypto assets.
As long as you want. You just have to ensure your loan-to-value stays in a healthy range (typically 50%-85%).
The interest rate is determined by the utilization of the asset. The fewer people borrowing it, the less interest, the more people borrowing it, the higher interest you will have to pay to borrow.