The challenge to encash crypto is still one of the biggest bottlenecks in the mass adoption of cryptocurrencies and the mainstreaming of decentralised finance ( DeFi ). Over the past decade, cryptocurrencies have evolved as a distinct asset class – and evidently, the more profitable compared to traditional investments like stocks and precious metals. For a significant majority, the idea that cryptocurrencies are “real money” lacks conviction. It is because of the limited real-world utilities of cryptocurrencies.
There is no doubt that cryptocurrencies are valuable digital assets. However, if cryptocurrencies are to accomplish the unique goal of the blockchain revolution – which is to create an alternative decentralised financial system – they must be seamlessly interchangeable with cash. Once the divide between fiat and crypto is flattened, only then will we be able to see blockchain-driven digital assets becoming a product of the masses.
Taking the challenge head-on, MELD, a Cardano-based DeFi protocol, is now bridging the gap between fiat and crypto, and is not only making them seamlessly interchangeable for users but is also adding new dimensions to the world of decentralised finance by making its exclusive services easily accessible to all by, providing no questions asked fiat loans against crypto collaterals.
INTRODUCING MELD – A DEFI PROJECT
MELD is one of the top DeFi projects on the Cardano network, created by MELD Labs. MELD explains itself to be “an open-source, non-custodial liquidity protocol for borrowing fiat (USD and EUR) against crypto collateral and earning yield on deposits”. Simply put, it is a DeFi project that allows anyone to use their crypto assets to get instant cash loans and also allows investors to leverage their fiat investments to generate better returns. In addition, MELD also provides a range of products, including MELD debit cards, which can also be used to open a line of credit against crypto investments. The goal is to provide access to decentralised financial tools to all and eliminate the barriers to entry for even the unbanked. In effect, MELD brings conventional banking services to the world of decentralised finance.
The project is led by a team of industry experts who have carefully crafted the protocol to deliver on the vision of connecting the financially marginalised and investors of all depths to one platform where they can enjoy the perks of DeFi. One of their advisors, Christian Katz, is a former CEO of the Swiss Stock Exchange. His presence in itself is a testimony to the fact that MELD is here to make shape-shifting changes to the world of finance. Also, the technical team behind MELD is one of the most experienced. In fact, MELD has the biggest tech team of Haskell Engineers, working behind the scenes, which makes Hachi & ADAmatic possible for MELD.
HOW FIAT LOANS AGAINST CRYPTO WORK IN DEFI
MELD protocol allows users to get cash advances against their crypto holdings. The ecosystem is designed to allow fiat liquidity providers to lend fiat to meld protocol. Investors can seamlessly lend cash and earn interest using MELDapp. Lenders earn a high rate of interest on their lent portfolio as MELD leverages multiple different sources to generate the interest paid to lenders on the platform. Borrowers are charged interest and the proceeds from “trading fees APY from the Vaults of MELDed assets” is also distributed to liquidity providers.
Borrowers can get cash loans in popular fiat currencies against their crypto holdings. It is a simple process. To borrow cash against crypto, all that a borrower has to do is to deposit their acquired tokens to a MELD loan smart contract. Initially, the MELD protocol will support Cardano (ADA), Bitcoin (BTC), Ethereum (ETH) and Binance Coin (BNB). Once the user deposits their crypto holding to the MELD loan smart contract, they become eligible to get up to 50% of the value deposited as a cash advance. Alternatively, users can also use their deposit to get a credit line, which would allow them to withdraw cash when they need it and pay interest only for the time they need cash. As such, MELD is offering a full suite of lending services against crypto collaterals, similar to conventional banking. The best part is that borrowers get instant cash with no strings attached and the fiat is transferred directly into the borrower’s account. MELD also provides a debit card that can be used to get credit against crypto collaterals.
To repay their fiat loans, users can choose to pay monthly interest and continue the loan or they can pay it all when they want and settle the account. Once the payment is made in full, the crypto collateral locked in the MELD loan smart contract gets automatically unlocked and the crypto assets are returned to their owners. To protect investors or liquidity providers, MELD allows lenders to withdraw their “fiat” investments at any point in time. Also, in the event of any crypto-backed fiat loan facing a liquidation issue, the collateral is converted to fiat to ensure that liquidity providers don’t lose their cash. The entire process is simple and makes DeFi easily accessible, while protecting the interest of investors and taking care of the needs of the borrowers.
It is important to note that borrowers who deposit crypto as collateral don’t have to partake with their holdings to get a secured loan with MELD protocol. They continue to be the rightful owners and have their keys. As such, borrowers continue to use fiat loans and also benefit from the increase in the value of their crypto holdings. MELD also ensures the entire process is fully compliant with local regulations. All users, including the lenders and borrowers, have to participate in the KYC and AML procedures while “depositing fiat, withdrawing fiat, receiving loans, and paying loan interest”.
WHAT BENEFITS MELD PROVIDES TO PRIVATE INVESTORS
The core idea that drives the MELD ecosystem is to bring financial empowerment by providing access to financial tools to all including small investors and even the unbanked. By making lending and borrowing seamless and equally profitable for all stakeholders, MELD is surely gearing up to give conventional financial intermediaries a run for their money. MELD’s products are meant for investors of all shapes and sizes, but we believe it is particularly useful for private retail investors who have always felt to be at the receiving end at the hands of big institutional investors who can operate at minimum margins. Here’s a list of key benefits that MELD offers to private investors:
1.Easy and secured opportunity to generate income from their investments: By not putting a cap on who can become an investor, MELD protocol allows even small retail and private investors to tap into the DeFi market and earn secured and fixed interest on their investments.
2.Secured investments: While the returns are guaranteed, the investments are secured because liquidity providers have their investment secured by crypto assets worth 2X the loan. Also, in the event of liquidation issues with the borrower, MELD automatically converts the crypto collaterals into fiat and redistributes them to the lenders.
MELD’s white paper explains: “Loans are issued at a Loan to Value (LTV) ratio of 50%. If the collateral value falls to LTV 65% or stays above 50% for more than three days, a margin call happens. The customer must provide added collateral to bring the loan back to an LTV of 50%. The same happens if the LTV reaches 75%. If the LTV reaches 85%, a liquidation event is triggered where the collateral is converted to USD/EUR stable coins, equivalent to the fiat loan plus a 5% fee. The balance of the collateral is then transferred back to the customer, and the smart contract terminates. The customers keep the fiat they borrowed.”
1.More profitable: MELD protocols have multiple different sources to leverage to provide investors with significantly better returns when compared to conventional investments. The APY with MELD investments is on par with the DeFi industry and up to at least 5X better than most conventional investments.
2.Accessibility: It’s a hassle-free, no-fuss protocol and after simple KYC and AML procedures, anyone can join the MELD ecosystem and become a fiat liquidity provider. There is no cumbersome and extensive paperwork required.
WHAT ARE MELD TOKENS?
MELD Tokens are the native tokens to the MELD ecosystem. They have several utilities on the platform:
1.Earning opportunity through staking: MELD is a DeFi protocol and users can stake their MELD tokens to earn static rewards. The protocol automatically rewards all MELD token owners who secure the network by staking their parked token holdings. Staking MELD tokens can be a great way to generate secured passive income. To protect token owners, the MELD staking pool acts as an insurance solution for protocol. The staking pool is specifically designed to mitigate any untoward losses that might occur due to impermanent loss (IL). MELD confirms that their APY for staking comes from 40% of all protocol fees, such as MELDed assets.
2.Governance: MELD tokens can also be used to participate in the governance of the MELD ecosystem. MELD operates as a decentralised automated organisation (DAO). All MELD token owners get to participate in the decision making. On the platform, “MELD holders can pay a small fee to open proposals that MELD stakers can vote on” through the MELD governance contract. Once a proposal is put to vote and it receives the required minimum participation and votes, the proposal is then forwarded for consideration and execution.
3.Early lender/borrower rewards: Early lenders and borrowers on the MELD protocol will receive rewards for their contributions. These rewards will be in native MELD tokens.
HOW TO GET $MELD
The only way to get $MELD currently is through their Initial Stake Pool Offering (ISPO). An ISPO is a liberating new way for investors and the community to support MELD using the Cardano blockchain. Users who wish to participate in the MELD ISPO can delegate their ADA to the public MELD stake pools to start earning the MELD token. Delegators will be rewarded with either 100% MELD rewards OR 50% MELD and 50% ADA rewards depending on the pool chosen.
OPPORTUNITIES WITH MELD AND DEFI
When you think of MELD, think of the ecosystem as a full suite of conventional banking and finance services forked on a DAO model. MELD is bringing the entire range of conventional banking solutions to the world of DeFi by creating an ingenious advanced protocol. The opportunities with MELD are abundant. If you are an investor, regardless of your ability to invest, you can start earning up to 5X better returns than conventional investments from day one. The investments are secured as becoming a fiat liquidity provider secures your lent sum with crypto collaterals. Alternatively, if you want to get into staking for higher returns and rewards, you can also purchase MELD tokens and stake them to earn 40% of protocol revenues and generate a static passive income.
Those who need cash but don’t want to part with their crypto assets can easily use their crypto as collateral to get an instant loan or a line of credit with MELD protocol. It is a win-win for both as borrowers continue to get benefits from the increase in value of their crypto holdings and also use cash when they need it. With a line of credit, users can use their crypto collaterals to own a product that is everything like a conventional credit card and can be used to withdraw cash as and when needed.
Moreover, MELD offers a range of products to make even newbies feel at home. The goal is to make decentralised financial services and opportunities available to all in a highly secure and hassle-free manner, while complying with all regulatory requirements. One can access all of MELD’s products and services using one single app, the MELD DApp. The MELD DApp will be live Q3, 2021, and will be available for iOS, Android and as a web extension.
MELD is a next-gen protocol that provides all stakeholders with practical utilities. Making crypto-backed fiat loans seamless and easy, MELD is rolling out the most extensive DeFi Banking ecosystem that is solid on all fronts, including regulatory compliance and executive expertise. It is also one of the top projects on the Cardano network at present. The DeFi world is exploding. Coinbase, in its latest earnings report for Q2, posted a 4,900% year-on-year increase in revenue attributing the gains to the movement of institutional investors to DeFi protocols. MELD has all the potential to be a market leader as it dilutes the hard separation between conventional and decentralised banking and allows seamless and profitable interchange between fiat and crypto. It wouldn’t be surprising if we see MELD taking the market by storm in the next couple of months.
Hopefully, you have enjoyed today’s article. Thanks for reading! Have a fantastic day! Live from the Platinum Crypto Trading Floor.
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