Borrowing & Lending FAQ

How much collateral would I need to put down say, for example, I want to borrow a thousand USD worth of BUSD?

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.

People get some crypto as collateral borrow fiat, buy crypto with that fiat, can borrow more crypto in an infinite loop?

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.

So there is no guarantee that my loan will be secure during the loan period, the fiat provider can demand payback at any time, at which point my crypto will be sold?

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.

What is the APY for the pools?

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.

What are the benefits of using MELD for crypto-backed loans?

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.

What is the process for obtaining a loan with MELD?

To obtain a loan with MELD, users must first download the MELDapp or go to https://app.meld.com/, 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.

What are the minimum and maximum loan amounts?

There is no minimum to the loan and the maximum loan amount is the average loan-to-value ratio of the deposited crypto assets.

How long is the loan period?

As long as you want. You just have to ensure your loan-to-value stays in a healthy range (typically 50%-85%).

What is the interest rate for loans?

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.