The SALT Lending Platform allows holders of blockchain assets to leverage their holdings as collateral for cash loans. SALT is the first asset-backed lending platform to give blockchain asset holders access to liquidity without them having to sell their tokens. SALT provides investors with an innovative and secure opportunity to lend against a high-growth asset class through a fully-collateralized debt vehicle. SALT is traditional lending secured by non-traditional collateral.
“Currently, if you are a holder of blockchain assets, a large piece of your financial wealth is not being recognized by lenders. With SALT, we see a future where virtually all of the world’s value is on blockchains, and lending is reflective of our globally-connected, digitized lives.”
-SALT CEO Shawn Owen
HOW DOES IT WORK?
The historical limitations of liquidating, transferring, and storing assets have forced lenders to focus on the creditworthiness of their borrowers. This inefficiency restricts the amount of capital that lenders can deploy. The result is the simultaneous increase in the cost to borrowers in the form of higher interest rates, and a decrease in the supply of available capital. SALT allows lenders to recognize the value of a borrower’s assets and completely eliminates the need for credit to play a role in lending decisions. SALT streamlines every step of the loan. With a simplified application process focused on the value of the borrower’s blockchain assets instead of their credit score, borrowers are automatically matched with capital from their extensive network of lenders. SALT keeps collateral assets safe in a fully-audited, ultra-secure architecture during the life of the loan so members can borrow with confidence.
Unlike a margin account on an exchange, SALT loan proceeds can be used to purchase anything, not just additional tokens. With SALT, the collateral is held in a distributed manner, reducing counterparty risk. Exchanges, on the other hand, are centralized and opaque, and holding large amounts of tokens on them poses a security risk. SALT loan terms also offer borrowers greater customization and flexibility than traditional exchange margin accounts. The process flow is as follows:
- Loan Creation – A borrower sends collateral to the SALT Collateral wallet and funds are transferred to the borrower’s bank account. Collateral remains the property of the borrower and any price appreciation or depreciation belongs to the borrower.
- Loan Repayment – A borrower makes timely, periodic payments to the lender.
- Loan Completion – Upon repayment of the loan, the borrower’s collateral is returned.
If a borrower misses a payment, the Secured Automated Lending Technology automatically liquidates a portion of the total collateral to cover both the missed payment and any associated fees. If a borrower continues to miss payments, the collateral will continue to be liquidated to cover monthly payments of principal, interest and fees until the loan-to-value ratio exceeds a predetermined threshold. Once the default reaches the triggering threshold described above, a balance of the collateral is liquidated to cover the missed payment and to calibrate the overcollateralization. This process continues until the loan is fully retired or matures. Lenders may elect to receive their funds in either the currency of the original loan or the equivalent value in blockchain assets. After the principal of the loan and accrued fees are paid out of the collateral, any remaining assets are returned to the borrower.
SALT MEMBERSHIP AND VALUE TIERS
The SALT membership is divided into 3 tiers. The basic membership allows the user access to upto $10,000 USD in term financing. The premier membership allows the user access to upto $100,000 USD in term financing and line of credit and lastly, the enterprise membership allows access to over $100,000 USD in term financing and line of credit.
CONCLUSION AND REVIEW
The team comprises of Erik Voorhees (the founder of Shapeshift, Satoshidice and Coinapult) as the Board director, Shawn Owen as the CEO, Joseph Schaible (former president of LavaFlow) as compliance officer amongst others. With Erik Voorhees and other notable experts, the SALT team packs a heavy punch in their armory and the team looks seriously capable of handling something as complex as SALT. The Presale for SALT is live and the Crowdsale for the same is scheduled to take place at the end of July 2017 or the beginning of August 2017.
With something as complex as SALT, the team looks competent to handle the difficulties and issues that could arise with the borrowers and lenders. The fundamentals look good on this project as they intend to raise a minimum of 35 million USD which is not a mind boggling amount considering the collateral and principal involved for using the Lending services. The project is one of its kind and it may be a phenomenon for decentralised lending services as the demand for valuing blockchain assets is growing and the lack of financial institutions accounting blockchain assets for loans doesn’t seem to be changing in the near future.
For detailed information regarding the SALT project and crowdsale, kindly visit www.saltlending.com
NOTE: This article is for review purpose only. This is NOT an investment advice.
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