The concept of borrowing and lending is nothing new in the financial market, especially in centralised finance. However, many individuals can relate to it from the fiat currency point of view. The good news is that crypto enthusiasts now have reason to invest more in cryptocurrency and crypto assets. Initially, many individuals have had the fear of venturing into the crypto sphere because of its volatility as well as due to fiat currency declining buying power. Therefore, there is a high risk involved in trading in cryptocurrency for fiat, especially during an emergency. For example, with the ongoing global pandemic, individuals and businesses are facing financial strain. As such, borrowing and lending is becoming a crucial yet sensitive matter. 

Crypto investors can grab the opportunity of requesting for a MELD crypto loan. Gone are the days when crypto enthusiasts have to hold their assets up until price appreciates before they can earn returns. This is where crypto lending comes in handy. Investors can earn crypto dividends by lending their cryptocurrencies to borrowers. With the popularity of crypto as a payment method as well as an outstanding investment opportunity, many more are venturing into the crypto market. Things get better considering that investors can now obtain loans in fiat currency against their cryptocurrency. Due to the decentralised nature of MELD crypto loans, lending is no longer a slow, complex, or bureaucratic process. As one of the top projects on Cardano, MELD is a DeFi project that allows individuals to get an instant cash loan against their crypto asset(s).

With challenges such as capital inefficiency, inaccessibility to many individuals, and complex processes, the inclusion of MELD DeFi seeks to unlock such tools by allowing for the automation and security of borrowing processes. Crypto lending comes with the added advantage of simplified and faster processes, absence of geographic restrictions, low transaction fees, as well as attractive interest rates. Up until recently, crypto and fiat markets did not mix. Investors have a reason to smile as these two worlds (crypto and fiat) mix with the launch of MELD. MELD DeFi is built on the Cardano blockchain and governed by the MELD token.

Important Announcement – $MELD will go live on exchanges on the 3rd of February.

The Idea Behind MELD

MELD, a Cardano-based banking protocol, is the first decentralised finance non-custodial banking protocol with the added advantage of securely lending and borrowing both fiat and cryptocurrencies, with a focus on the major currencies in each category. MELD seeks to address a number of concerns in the community to ensure that borrowing and lending is accessible to all, even those who do not have access to physical banking services. The birth of MELD came to be based on solving the following concerns. 

  • Create an ecosystem empowering individuals to gain financial control

The more individuals get to know about cryptocurrencies, the more they venture into the investment. More individuals and institutions alike are amassing wealth in this industry. However, they experience limited liquidity in addition to difficulty in accessing fiat currency from their investment. Every investor expects to increase their portfolio as the crypto market grows. MELD is providing a solution to this concern by collateralising crypto assets with the ability to unlock up to 50% of these assets’ value and given to the investor in the form of a fiat loan, thus promoting capital efficiency.Confirmed from a tweet, on MELD’s official Twitter account, individuals are requested to break on through to the other side and be their own bank. 

  • Provide financial services to everyone, eliminating geographical boundaries

It is evident that centralised financial services are not accessible to the majority of the population. It is therefore important that everyone has access, including those in regions who are finding it difficult to access brick and mortar financial services. 

  • Allow for the access of cash from crypto investments

Initially, investors had to trade their crypto if they were to access their investment in form of fiat currency. This process incurs capital gains tax, which leaves the process expensive. MELD brought about the idea of crypto collateralised loans to tackle this mentioned concern for crypto investors. This type of loan does not realise capital gains. In addition, investors can still benefit from gains obtained from his or her crypto investment. The key objective was to provide a more affordable financial solution that is tax efficient. 

  • To ease conversion of crypto assets into fiat currency

The cryptocurrency market has gained popularity as more individuals venture into the field. Market participants, including institutions, miners, and businesses, face challenges when it comes to converting crypto assets into fiat currency. This conversion is challenging because fiat currency declines in buying power while at the same time converting the crypto to fiat attracts capital gains tax. To place a level playing field for both fiat and crypto lending, MELD offers crypto-backed loans in both denominations, while upholding to competitive market interest rates.

Understanding MELD Model 

The MELD business model seeks to lend fiat currency from fiat lenders to borrowers, who collateralise individual cryptocurrency in a MELD smart contract. This business model allows a lender to receive a high interest rate, whereas the borrower maintains his or her crypto while maintaining the ability to grow it. MELD will stake the collateral in community-managed liquidity pools to obtain revenue. The revenue is divided into half, 50% to MELD and the other 50% goes to MELD token holders. The MELD model comprises of fiat liquidity lending, crypto collateral, fiat borrowing, MELD vaults, loan repayment, crypto collateral returned, and fiat liquidity returned. 

The model includes fiat liquidity providers who lend fiat to the MELD protocol. This process is completed through the MELD App and it comes with the added advantage of earning high interest returns. These returns are obtained from a number of sources including interest earned from borrowers, trading fees from MELDed assets, as well as from protocol rewards. According to the MELD Foundation legal framework, they are authorised to hold fiat, thus making it safe and secure. 

Once the MELD protocol has sufficient fiat, crypto investors can now gain access to fiat loans against their crypto. Borrowers must deposit crypto to the MELD loan smart contract before they can request for a fiat loan, thus the reason this model features crypto collateral. With fiat currency and crypto collateral in place, fiat borrowing can now take place.

The MELD protocol offers two fiat borrowing services; namely, crypto-backed loans and a line of credit to access a fiat loan. To borrow, crypto owners need to deposit 200% of the fiat loan they wish to apply. For example: if you wish to borrow $10,000 fiat, then you are required to deposit cryptocurrency that has the value of at least $20,000 as of the time you are applying for the loan. Once the process is complete, crypto-backed loan borrowers will receive their fiat loan via wire transfer into their account. Line of credit borrowers access their cash through a MELD debit card. 

Every time a user deposits crypto and it is locked in a smart contract, it is placed in its respective token pool. Each pool comes with the advantage of earning yields through trading fees APY from external DEX routers. Why is this necessary, you may ask? The MELD protocol through its MELD vault has integrated impermanent loss protection for all crypto depositors, meaning that all investments are safe and secure. 

As part of the MELD business model, the MELD token provides the utility function. As a utility function, users can pay for transactions on the protocol. Alternatively, users may choose to stake MELD, which will earn them APY as rewards. 

The terms of loan repayment work the same, whereby the borrower is expected to pay back the principal and the interest on a monthly basis until the full amount is settled. After completion of the loan repayment, crypto collateral is unlocked, after which it is withdrawn from the liquidity pool and deposited into the owner’s wallet. 

How MELD Provides Cash For Crypto

MELD offers lending and borrowing with both cryptocurrency and fiat with the objective of promoting innovation for greater capital efficiency to meet the demands and needs of DeFi customers. MELD’s initial service was to provide crypto assets from other main blockchain networks that are within the Cardano network. Although Cardano offers a number of projects, MELD remains one of the top projects on Cardano, despite its recent entry into the market. This strategy is the reason MELD is able to enable liquidity, thus use it in borrowing and lending. Since MELD’s inception, they are looking into partnerships with already established DeFi protocols to provide relevant products and services. The key objective of MELD is to provide crypto-backed loans. You are wondering how MELD provides cash for crypto. This process is not complicated and with the following steps, you will be able to receive your fiat loan against your cryptocurrency. 

  • Deposit your crypto to MELD

The first step would be for an individual to make a deposit of their cryptocurrency to MELD, which will act as collateral. Using the crypto deposit, the protocol will create a Collateralised Debt Position (CDP). The MELD App allows users to directly manage their CDP. 

  • Register terms of the loan

Tied to a smart contract, the terms of the MELD crypto loan are registered on the blockchain. This automates the process, making it transparent, fast, and easy. A contract is therefore executed when predetermined terms and conditions are met by the individual seeking to borrow fiat against his or her crypto. 

  • Complete KYC 

Know Your Customer (KYC) plays a key role in understanding MELD customers with the objective of preventing money laundering and tax evasion alongside other illegal activities. This improves security as well as opens up new opportunities for a broader use and adoption of crypto assets. The KYC process is brief, allowing you to obtain your fiat loan fast. Under the MELD Foundation legal framework, KYC procedures must be performed to verify users. The MELD Foundation will complete this process to verify a user’s identity before withdrawing, depositing, or even paying loan interest. 

  • Transfer money to your account 

The last step would be to transfer funds (in fiat currency) to your bank account. There are key factors to put into consideration when considering a fiat loan on your crypto. All loans are issued at a Loan to Value (LTV) ratio of 50%. In the event the LTV stays above the 50% for more than three days consecutively, the protocol will call for a margin call in which the customer provides added collateral to ensure the loan remains at the 50% LTV. 

What Are Other MELD Products For Retail Investors?

The most popular MELD product for retail investors that is creating a buzz in the finance market is the crypto-backed loans. However, MELD offers other products ideal for retail investors. These products include: 

  • Genius self-repaying loan 

The reason this product is termed “genius” is because the loan is self-repaying. The customer will collateralise their crypto. The difference between this product and the main product is that, the genius loan incurs a slightly higher interest rate. However, it is important for customers to know that they only get to service the interest and not principle. The principle is paid from part of the yields that are generated by the collateral. This unique product is only available through DeFi’s decentralised nature. 

  • Crypto-backed line of credit 

The Crypto-backed Credit Line (CBCL) product helps customers to manage fiat cash requirements while at the same time being exposed to interest on the amount of fiat used by the customer. 

  • MELD debit card 

MELD seeks to provide financial control for everyone by unlocking the value of their crypto to obtain fiat currency. With this debit card, individuals can spend the obtained fiat currency in any outlet that accepts VISA/MasterCard. You can now invest in crypto and still be able to spend in outlets that require fiat currency without several demanding processes that require converting crypto to fiat, be it from an exchange or bank accounts. You can buy goods and services without necessarily converting your crypto into fiat. 

  • MELD App 

With the advancement in technology, more and more institutions are moving towards providing their consumers with a user-friendly app to ease all processes. The MELD App eases the process of borrowing and lending fiat. It comes with an easy-to-use interface for simplified maneuverability. With a simple click on an icon, users have the ability to link their crypto assets to different wallets and blockchains. The app is compatible with iOS, Android, and Chrome Extensions. 

  • MELDed Assets 

Hype or Utility?

MELD is seeking to serve the wider mass market in the crypto sphere by providing borrowing solutions to consumers who wish to access fiat in relation to the value locked within their cryptocurrencies. Cryptocurrencies are less liquid as compared to fiat currency, making it a major concern for crypto investors every time they need to purchase goods or services or obtain a loan. MELD is seeking to provide a solution to this problem by allowing crypto investors to borrow and lend fiat against the value of their crypto. 

During the inception of MELD, many in the financial industry addressed its idea as hype but it has proven to be more of a utility in both centralised and decentralised markets. The products and services offered by MELD serve a functional use, offering a state of profitability. The MELD protocol is also beneficial and useful to a wider target market. Understanding its functionality highlights its importance.

Before we can have a look at its business benefits, it is important to note that MELD is keen to meet its Corporate Social Responsibility (CSR). MELD has already contributed to Cardano’s global tree challenge. This venture is not only a financial benefit to investors but also to the community. Ken Olling, MELD’s CEO, stated

“We’ve had an amazing community be built up, have grown the awareness of new fundraising models, and have attracted thousands of new users into the Cardano ecosystem because of it and we can’t thank you guys enough for all your continued support and effort towards MELD! This is only the beginning.”

The MELD commitment to the DeFi space contributes towards MELD’s added advantage because it is trustless, decentralised, and non-custodial. Currently in the market, MELD is the only DeFi protocol that offers fiat loans from crypto-backed collateral. 

Thanks to the Cardano staking mechanism, MELD shed some light on its Initial Stakepool Offering (ISPO).  An ISPO allows investors and early adopters to support a project through public stake pools in exchange for the project’s tokens. During the first ever MELD ISPO, which was concluded on December the 8th, participants staked close to 620 million ADA. This shows that more people are willing to support crypto-related projects. Individuals can benefit from the $MELD rewards.


It is important that everyone gains control of their financial lives, while at the same time having equal access to financial tools and instruments that even professionals use. MELD will serve the larger mass market by not only addressing the needs of centralised institutions but also those who are still unbanked for different reasons. MELD remains a top project on Cardano with the ability to offer fiat loans against crypto without giving up their keys. The MELD model is simplified to ensure easy access to individuals, while at the same time allowing investors to retain their crypto investment.

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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