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Like this? 0: Holder has ETH 1: Holder borrows Tether, provieds ETH as collateral 2: Holder uses Tether to buy a house 3: Holder borrows Dollar, provides ho
by ArtTimeInvestor 6y ago
Like this?
0: Holder has ETH
1: Holder borrows Tether, provieds ETH as collateral
2: Holder uses Tether to buy a house
3: Holder borrows Dollar, provides house as collateral
4: Holder buys Tether with Dollar
5: Holder pays back Tether, gets back ETH.
6: Holder now has ETH + House + Dollar Dept
If so, why couldn't they lend the dollars to buy the house in the first place? The bank which lends the dollars certainly could make a contract that the dollars only can be used to buy the house?
- kristjansson 6y agoRates are lower on margin loan, and they’re easier to get compared to a proper mortgage (assuming, you know, you have value assets to borrow against)
- ArtTimeInvestor 6y agoYou say a bank loans money to someone who owns a certain house, but not to someone who uses the money to buy the exact same house?
- orky56 6y agoRates might be lower but they're not usually fixed. They're easier to get assuming your liquidity is in equities versus crypto or even a stable income. There's a reason mortgage financing is still more prevalent than margin loans despite what you've stated which are inherent benefits.
- orky56 6y agoReal estate financing is primarily done by lenders with very traditional underwriting practices that don't factor in crypto or avoid it entirely. Even HNI/private banking doesn't consider crypto part of a liquid portfolio. You can go to Interactive Brokers and get a 1.x% rate with 2x (margin) or 5x (portfolio margin) but that's off non-crypto. To get that same leverage with crypto, you can put in a down payment for real estate (20% down) in 5 properties for 5x leverage. BlockFi/Tether etc. make that liquidity possible without liquidation. Feel free to DM me for more conversation on this topic.