The most important participants of the platform are lenders, as SALT provides them with the infrastructure, flexibility and security necessary to accept coins without adding additional costs to the process. In exchange for these services, lenders pay for membership on the platform.
The service never asks for a credit rating — instead, it uses only the value of collateral to determine the terms of the loan. Once the collateral is transferred, it is held in deep cold storage. The company says that the private keys are never exposed to a network-connected device and are protected by multisignature processes.
When taking out a loan with SALT, borrowers can choose their preferred loan amount, loan type, duration and the Loan-to-Value, which ranges from 30%–70%. To secure their loan, borrowers may choose a single collateral or any combination of cryptocurrencies including BTC, Ether and others. The platform also uses SALT tokens, also known as membership tokens, which are based on the ERC-20 standard and are required to purchase membership on the platform.
The borrowers then pay monthly installments toward their loan according to its terms, and when the loan is repaid, SALT releases the security deposit from the smart contract and returns it.
SALT Oracle creates a smart contract for each loan and credit event. To reduce the risk of nonpayment, the Oracle records all payments made on loans and monitors changes in the value of provided cryptocurrency collateral. Each loan starts with a credit-to-value ratio that is calculated based on current market prices.
Related: DeFi and Credit on the Blockchain: Why Loans Are Better When They’re Decentralized
Nexo
Established in 2017, Nexo is an instant lending platform that claims to have a military level of security (256-bit encryption). To start the loan process, users transfer assets to their secure Nexo wallets, where these assets come under the protection of the BITGO repository. Then, users may obtain instant credit. The platform accepts submissions of BTC, ETH, XPR, LTC, XLM, BCH, stablecoins, NEXO tokens and BNB as collateral.
After confirming the collateral, the Nexo Oracle evaluates the collateral and then calculates a suitable loan-to-value ratio. After the LTV is calculated, users receive money directly in the form of fiat or a stablecoin.
Repaying a loan to Nexo is quite flexible, as users are not required to repay monthly until their balance is less than the loan limit. Like SALT, Nexo tokens can be used to lower interest rates and repayments.
Borrowers can take advantage of a 50% discount on the loan’s interest rate if the security deposit or loan repayment is paid in Nexo tokens. Users of the platform can repay all or part of their loans at any time via bank transfer, cryptocurrencies or assets deposited in their Nexo wallet.
Once borrowers have repaid the entire loan amount along with interest, they can easily withdraw their crypto assets from their wallet. George Manolov, business development executive at Nexo, pointed out that users pay interest only on what they actually spend:
“Our customers only pay interest on the amount they borrow. In contrast, other lenders require you to withdraw the entire amount of a loan at the time of origination, meaning customers pay interest on their full loan.”
Celsius Network
The Celsius Network was created in 2017 and is a crypto credit platform providing a new model of financial services that act in the best interest of the community. It has a mobile app that allows users to earn interest on stablecoins and a number of cryptocurrencies.
The Celsius platform allows borrowing money against crypto collateral at interest rates as low as 4.95% per annum. This interest rate works mainly for dollars as well as stablecoins such as USDT and USDC, and the minimum loan limit is $1,500, which needs to be backed by an equivalent amount in crypto.
Celsius has a full-fledged transaction instrument called CelPay, which works as a wallet that allows free cryptocurrency transfers from one wallet to another. Furthermore, Celsius Network charges no fees for withdrawals, deposits, transactions or early terminations. The platform has its own token, CEL, which is purely a service token that is used to provide users with discounts on borrowing and deposit services.
Additionally, any user can become a lender by putting their crypto into cold storage and earning interest from it. Regardless of the amount that users are ready to put in, they earn weekly interest in either the same token deposited or the native CEL token.
At the moment, Celsius Network is one of the biggest crypto loan platforms in the world, reaching $4.25 billion in total crypto loans in November.
YouHodler
YouHodler is a Swiss company that specializes in providing a cryptocurrency line of credit and a cryptocurrency exchange platform. Founded in 2018, the company’s mission is to minimize passive ownership, allowing investors to earn interest on their assets or borrow money.
One of the most core products offered by YouHodler are cryptocurrency loans, available in tokens such as BTC, ETH, XRP, Dash, LTC and so on. Depending on the token, users can choose one of the available plans, which differ by loan period. For example, users can choose plans that range from 55% to 95% in cost ratio, from 5% to 40% in price reduction, and a loan period from 30 days to 180 days.
The company does not perform any credit checks, as user credit scores are meaningless to the loan application process. Borrowed money is fully secured by cryptocurrency and is based on the loan-to-value ratio. Because of this, even if users cannot repay their loan, their credit score will not be affected.
Additionally, YouHodler has a Turbocharge service, which allows users to get a chain of loans. The platform uses borrowed fiat to purchase additional cryptocurrency without commission and then uses it as collateral for other loans in the chain. Ilya Volkov, CEO of YouHodler, says the option is popular among traders:
“Clients were using loans to buy more crypto to use as collateral for yet another loan and then using that again to buy more crypto for collateral. They would do this process manually multiple times. So, we invented an automated tool that completed this chain for them in one click.”
