SALT Lending blockchain-based platform
What is SALT Lending
SALT Lending is a blockchain-based lending platform that allows users to borrow against their cryptocurrency assets as collateral. The platform provides loans in fiat currency (such as USD) or stablecoins, while using cryptocurrency holdings, such as Bitcoin or Ethereum, as collateral.
This allows borrowers to access liquidity without having to sell their cryptocurrency holdings, thereby avoiding potential tax consequences or missing out on potential price appreciation.
SALT Lending offers a streamlined lending process, where borrowers can apply for loans online, and once approved, can receive their loan funds in their preferred currency.
Borrowers make monthly interest payments on their loans, and can repay the principal amount at the end of the loan term to reclaim their collateralized cryptocurrency assets. If a borrower fails to repay the loan, the collateralized cryptocurrency assets may be liquidated to recover the outstanding loan amount.
SALT Lending aims to provide borrowers with a convenient and flexible way to access capital using their cryptocurrency assets as collateral, without having to go through traditional credit checks or sell their cryptocurrencies. It also offers an option for lenders to earn interest on their cryptocurrency holdings by providing loans on the platform.
However, it’s important to note that cryptocurrency lending platforms like SALT Lending carry risks, such as potential volatility in cryptocurrency prices and the possibility of losing collateralized assets if loans are not repaid according to the terms and conditions. Therefore, users should carefully consider the risks and benefits before using such platforms.
The history of SALT Lending
SALT Lending was founded in 2016 by Blake Cohen and Benjamin Yablon with the aim of providing a lending platform that allows borrowers to use their cryptocurrency holdings as collateral for loans. The company is headquartered in Denver, Colorado, USA.
The idea for SALT Lending was born out of the founders’ desire to address the issue of illiquidity faced by many cryptocurrency holders. They saw that many cryptocurrency investors had significant wealth tied up in their digital assets, but lacked access to traditional liquidity options like loans from banks or credit unions, without selling their cryptocurrencies.
This led to the inception of SALT Lending as a solution to enable borrowers to leverage their cryptocurrency holdings as collateral for loans, while retaining ownership of their cryptocurrencies.
SALT Lending launched its platform in 2017 and quickly gained attention in the cryptocurrency community for its unique lending model. The platform initially offered loans secured by Bitcoin, with plans to expand to other cryptocurrencies in the future.
Borrowers could apply for loans by depositing their Bitcoin as collateral, and then receive loans in USD or other stablecoins, which they could use for various purposes, such as paying off debts, funding business ventures, or making investments.
Since its launch, SALT Lending has undergone several updates and enhancements to its platform, including the expansion of its cryptocurrency collateral options beyond Bitcoin to include other cryptocurrencies such as Ethereum, Litecoin, and Dogecoin.
The platform also introduced additional features, such as a mobile app, a membership program, and partnerships with institutional investors to expand its lending capabilities.
However, in late 2019, SALT Lending faced regulatory challenges from the U.S. Securities and Exchange Commission (SEC) regarding its initial coin offering (ICO) and was forced to halt its lending operations temporarily. The company has since been working with regulators to resolve the issue and has been exploring options to relaunch its lending services.
How SALT Lending works
SALT Lending operates as a blockchain-based lending platform that allows borrowers to use their cryptocurrency assets as collateral for loans. The general process of how SALT Lending works can be outlined as follows:
- Application: Borrowers create an account on the SALT Lending platform and submit a loan application. The application typically includes information such as the loan amount, desired loan term, and the type of cryptocurrency to be used as collateral.
- Collateral deposit: Once the loan application is approved, the borrower transfers the cryptocurrency collateral to a secure multi-signature wallet provided by SALT Lending. The collateral is held in custody during the loan term.
- Loan disbursement: Upon successful verification of the collateral deposit, SALT Lending disburses the loan amount to the borrower in their preferred currency, such as USD or stablecoins. The loan amount is determined based on the loan-to-value (LTV) ratio, which is the ratio of the loan amount to the value of the cryptocurrency collateral.
- Repayment: Borrowers are required to make monthly interest payments on the loan during the loan term. The interest rate is predetermined and agreed upon during the loan application process. Borrowers can also choose to repay the principal amount at the end of the loan term to reclaim their collateralized cryptocurrency assets. Alternatively, borrowers may choose to extend the loan term by paying additional interest.
- Collateral redemption: Once the loan is fully repaid, including the principal and interest, the collateralized cryptocurrency assets are returned to the borrower. The borrower can then withdraw their collateral from the SALT Lending wallet.
- Liquidation: In case of default, if a borrower fails to repay the loan as per the terms and conditions, SALT Lending may liquidate the collateralized cryptocurrency assets to recover the outstanding loan amount. The liquidation process typically involves selling the collateral on an exchange, and any remaining proceeds after repaying the loan and associated fees are returned to the borrower.
It’s important to note that the specific details of how SALT Lending works may vary depending on the loan terms, collateral options, interest rates, and other factors.
Borrowers should carefully review the terms and conditions, fees, and risks associated with borrowing on the SALT Lending platform, and seek professional advice if needed, before proceeding with a loan application.
Does SALT Lending charge a fee
Yes, SALT Lending charges fees for its lending services. The specific fees may vary depending on various factors, such as the loan amount, loan term, interest rate, and other terms and conditions. Some of the common fees that may be charged by SALT Lending include:
- Origination fee: This is a one-time fee charged at the beginning of the loan term, typically as a percentage of the loan amount. It covers the costs associated with processing and underwriting the loan.
- Interest rate: SALT Lending charges interest on the loan amount, which is typically calculated based on an annual percentage rate (APR). The interest rate is predetermined and agreed upon during the loan application process.
- Extension fee: If a borrower chooses to extend the loan term beyond the original agreed-upon term, SALT Lending may charge an extension fee. This fee is typically calculated as a percentage of the outstanding loan amount and may be charged for each extension period.
- Liquidation fee: In case of default and liquidation of the collateralized cryptocurrency assets, SALT Lending may charge a liquidation fee. This fee covers the costs associated with the liquidation process, such as selling the collateral on an exchange.
It’s important for borrowers to carefully review the fees associated with borrowing on the SALT Lending platform, as they can impact the overall cost of the loan.
Fees may vary and be subject to change, so borrowers should refer to the most up-to-date fee schedule provided by SALT Lending or consult with SALT Lending directly for detailed information on their fees.
How to use SALT Lending
Here is a step-by-step guide on how to use SALT Lending:
Step 1: Create an account Go to the SALT Lending website and create an account by providing the required information, such as your name, email address, and password. Complete the account verification process, which may include providing identification documents.
Step 2: Submit a loan application Once your account is verified, log in to your SALT Lending account and navigate to the loan application section. Fill out the loan application form, which typically includes information such as the loan amount, desired loan term, type of cryptocurrency to be used as collateral, and other relevant details. Review and confirm the loan terms and conditions, including the interest rate and fees.
Step 3: Deposit collateral If your loan application is approved, SALT Lending will provide you with a multi-signature wallet address where you need to transfer the cryptocurrency collateral. Follow the instructions provided by SALT Lending to transfer the required collateral amount to the designated wallet address. The collateral will be held in custody during the loan term.
Step 4: Loan disbursement After successful verification of the collateral deposit, SALT Lending will disburse the loan amount to your preferred currency, such as USD or stablecoins. The loan amount will be determined based on the loan-to-value (LTV) ratio, which is the ratio of the loan amount to the value of the cryptocurrency collateral.
Step 5: Repay the loan You will be required to make monthly interest payments on the loan during the loan term. The interest rate and repayment terms are predetermined and agreed upon during the loan application process. You can also choose to repay the principal amount at the end of the loan term to reclaim your collateralized cryptocurrency assets. Alternatively, you can extend the loan term by paying additional interest.
Step 6: Collateral redemption Once the loan is fully repaid, including the principal and interest, SALT Lending will return the collateralized cryptocurrency assets to you. You can then withdraw your collateral from the SALT Lending wallet.
Step 7: Liquidation (if applicable) In case of default and failure to repay the loan as per the terms and conditions, SALT Lending may liquidate the collateralized cryptocurrency assets to recover the outstanding loan amount. The liquidation process typically involves selling the collateral on an exchange. Any remaining proceeds after repaying the loan and associated fees will be returned to you.
It’s important to note that the specific steps and requirements of using SALT Lending may vary, and borrowers should carefully review and follow the instructions provided by SALT Lending, as well as thoroughly understand the loan terms, fees, and risks associated with borrowing on the platform. Seeking professional advice, if needed, is also recommended.