How do you obtain the funds when you are badly in need of money? Generally speaking, we will mortgage the house or use the car or other valuables as collateral to obtain the funds. Throughout the ages, the form of loan is not changed but the collateral changed with time going by.
At the very beginning, the valuables, like the jewelry, is used as collateral. With the development of society, the securities become collateral. Then it comes to the age of digital technology, a new-type of collateral is born at the right moment — digital assets.
The digital asset-backed loans mainly serves for the users who in need of funds but do not want to sell his digital assets now which may afford a good profit in the future, and the users who have idle cash to invest.
It is the loan between users, which means one user use digital assets as collateral to borrow money (called borrower), and another user lend the stable currency(called lender). Bitmesh plays the role of escrow.
For example, I want to borrow money. Firstly, I need to select the borrowing currency and appropriate lender. (appropriate limit, APR, duration, collateral rate, etc.)
Click the “Borrow” button and confirm the borrowing details.
Here are the details of borrowing money, please note there is a liquidation line=120%. What is liquidation line? It involves in collateral rate. When I borrow the money, to ensure the asset security of lender, the total value of digital assets used as collateral shall be larger than borrowing amount (formula: collateral rate=collateral value / borrowing amount). The digital assets will be frozen on Bitmesh Platform in cold wallet, no one can divert it. The collateral rate will change with the market price of digital assets, when the collateral rate decrease to 130%, the borrower need to add the collateral or early repay; when the collateral rate decrease to 120% but the borrower has not add the collateral, the forced liquidation is triggered.
When the borrowing is due, I shall repay the principle and interest to lender and Bitmesh Platform will return the collateral back to me.
If you cannot find the right lender, you can post a trade yourself to list your requirement and wait for the lender.
As for the borrower, the digital asset-backed loans can help to obtain the funds immediately to meet crying needs. Comparatively speaking, the traditional lending is based on credit auditing and mortgaging real estate, which takes a lot of legal materials, human cost, economic cost and time cost.
As for the lender, the digital asset-backed loans can be used for investing with idle cash and it is safe. If the borrower break the contract, the forced liquidation will be triggered. All the principle and interest will be repaid to lender after liquidation.
Bitmesh, as the pioneer of digital asset-backed loans, supports to use BTC, ETH, LTC, etc. as collateral and is committed to help the borrowers with turnover of capital and provide the lenders a low-risk financial management way.
If you think it is a good product, come and try on https://loan.bitmesh.com
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