Lending is a hot area in fintech right now, with many different startups hoping to disrupt traditional financial institution lending programs through peer-to-peer platforms. Given that studies have shown that these lending apps can be manipulated in the interest of a borrower, a number of blockchain projects have formed with the hopes of developing a fairer system.

One such project is SALT, a lending platform that was a built to facilitate the creation of lending agreements using blockchain assets as collateral. Through the SALT platform, individuals and businesses are able to access the largely illiquid value of their blockchain assets by putting these assets up as collateral in return for fiat loans. These lending agreements are secure, as their terms are automatically enforced through smart contracts and once a loan is repaid, crypto assets are returned to the borrower. Therefore, the SALT platform is designed for individuals and businesses that are needing immediate cash infusions but are unwilling or unable to liquidate their cryptocurrency holdings.

Interested in SALT? Here’s a quick rundown of the project:

Platform & Development

The key to the SALT platform is its protocol agnostic technology designed to automatically manage blockchain backed credit agreements between borrowers and lenders. These smart contract agreements boast several key functions, as detailed in the SALT white paper:

Secure Collateral Storage – The blockchain assets underlying each loan are stored in a fully audited, ultra-secure multi-signature architecture throughout the life of the loan. Automatic Collateral Management – The SALT oracle smart contract amalgamates real-time global market price metrics from multiple data channels to assess the mark-to-market valuation of the collateral securing the credit agreement, while simultaneously tracking the borrower’s loan balance. If the value of the collateral depreciates below a dynamically determined threshold, a maintenance call notice is issued to the borrower. Credit Agreement Terms Enforcement – Smart contract monitors the origination of the loan, directing cash from the lender’s bank account to the borrower’s bank account, and it tracks monthly payments from the borrower to the lender. If a borrower misses a payment, the technology automatically liquidates a portion of the collateral and gives sale proceeds to the lender as payment on the borrower’s behalf.

It’s important to note that there are no origination fees, closing costs, or prepayment penalties on any fixed rate term loans arranged through the SALT platform, which is very different than traditional lending systems.

Borrowers are able to initiate lending requests (without a credit check) once they become members of the SALT platform, which requires the purchase of various amount SALT tokens, depending on the membership tier. From there, the process is fairly straightforward (see figure above). Lenders, who are all pre-screened accredited investors, are able to post their own terms, and monthly payments are made on each loan. Once the loan is repaid in full, the borrower’s blockchain assets are returned and the lender is paid back his principal plus interest.

Currently, many in the SALT community are questioning the underlying value, or necessity, of the SALT token. Given that SALT sets the retail price on their platform for token purchase, some have found opportunities for arbitrage. Time will tell if more mainstream adoption of the SALT platform will feed into more expansive SALT use cases.

Team

The SALT team is led by Shawn Owen, who has been involved with cryptocurrencies since the early days of Bitcoin. The team looks to be well-suited to develop a blockchain-based fintech application, and they recently brought on a new CTO to lead platform expansion.

Token Financials

SALT (SALT) currently has a market cap of ~$120 million with a circulating supply of 55,776,111 SALT and a total supply of 120,000,000 SALT.

Final Take

SALT is an interesting platform hopes to solve some key problems related to peer-to-peer lending and cryptocurrency asset liquidity. While the platform itself looks to be innovative, the necessity of the SALT token leaves much to be desired. We will watch closely to see how the token evolves as more and more users begin leveraging the SALT platform.

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Disclaimer: The author(s) of this article may have a position in one or more of the securities mentioned above. This article is for informational purposes only and should not be taken as investment advice. Always conduct your own due diligence before making investments.