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Right now we expect most loans will be fully collateralized by other crypto-assets. So the default deterrence would be that if you don't pay back your loan, you
by bpforster24 8y ago
Right now we expect most loans will be fully collateralized by other crypto-assets. So the default deterrence would be that if you don't pay back your loan, you lose your collateral.
We also support unsecured loans (i.e., loans that are not fully collateralized). We consider these pretty experimental and lenders should do a lot of diligence before investing.
For unsecured loans, counterparties can agree to any kind of default deterrence that they want. Could be off-chain legal agreement, could be a reputation scheme, etc.
- aphextron 8y agoWhat exactly is the use case for a 100% secured loan?
- bpforster24 8y agoEven if you 100% collateralize, you can get 2x leverage. That leverage can be applied to all sorts of use-cases, but we think one of the main ones that will be common today is speculative margin trading (e.g., short selling)
- spookthesunset 8y agoSo basically, like all crypto it’s just another layer of speculative trading, fraud and scams all the way down? Congratulations, I guess...