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It's over-collaterized, so you put more crypto than the loan value. You might say "why the hell would I do that?", in order of importance: 1) you hold on to yo
by rawtxapp 6y ago
It's over-collaterized, so you put more crypto than the loan value.
You might say "why the hell would I do that?", in order of importance:
1) you hold on to your asset's appreciation,
2) access the liquidity,
3) avoid capital gains tax.
- skybrian 6y agoOkay, but that seems like a pretty small niche? Most people don’t borrow just to save money on taxes on their cryptocurrency gains.
- rawtxapp 6y agoThey might borrow to hold on to their asset's appreciation.
- skybrian 6y agoYou could lock in the gain by selling at the current price, so that still sounds like tax avoidance. Or possibly leverage, if you think the price will go up more?
- rawtxapp 6y agoYes, you could leverage, you could hedge yourself by buying stocks. Or you could just spend the money on whatever else you want.
- lasc4r 6y agoSo the killer use case is a scheme to avoid capital gains taxes? Sounds about right.
- throwaway829 6y agoYou realize elites are already doing this with USD. It's not unique to crypto.
- langitbiru 6y agoI think in the past someone mentioned about under-collaterized loan. It's based on your reputation. The idea is you use your Ethereum account to do activities. Based on these activities, people could give you a loan. Such activities can be something like answering questions (imagine Stackoverflow but the authentication runs on Ethereum).