SALT lending is a platform that provides Blockchain-Backed Loans.

SALT (Secured Automated Lending Platform) enables you to put up your crypto as collateral in exchange for a cash loan. This is ideal if you need to pay-off an unexpected expense or want to make a big purchase without having to sell-off your blockchain assets.

In this SALT lending guide, we’re going to outline:

How does SALT Lending work?

SALT revolves around the company’s trademarked Blockchain-Backed Loans. Blockchain-Backed Loans are simply loans in which you hand over a blockchain asset, like Bitcoin, as collateral in exchange for traditional currencies. Unlike traditional auto or home loans, you can use these loans for any personal or business expense.

Membership

To use the SALT lending platform, you first need to pay to become a member. There are three tiers of membership:

Base (1 SALT/year) Premier (10 SALT/year) Enterprise (100 SALT/year)

Higher membership tiers enable you to borrow more money across additional currencies and give you more flexible loan terms. Higher tiers also enjoy a range of other perks such as early access to new products, portfolio management, and credit/debit cards.

You need to provide minimal personal information to create an account and become a member. All that’s required is your first name, last name, and a valid email address.

When you apply for a loan, though, you’ll be subject to Know Your Customer (KYC) and Anti-Money Laundering (AML) restrictions, so be prepared to upload an ID.

Lenders

On the other side of SALT are the lenders. Lenders have previously avoided dealing with cryptocurrencies because of the oftentimes complicated nature of the assets. SALT provides lenders with the infrastructure, compliance, and security they need to accept crypto collateral without adding additional costs to their current processes.

In exchange for these services, lenders must also pay for a SALT membership.

Loan Process

Once again differing from traditional finance, SALT never inquires your credit score. Instead, the platform only uses the value of your crypto collateral to determine the terms of your loan.

Lenders kick-off the loan process by posting the terms in which they’re willing to lend. As a borrower, you can look through the various terms and choose the one that’s best suited for you.

Once you pick a loan, the loaners commit the cash funds while you provide collateral to a smart contract. The cash funds are sent directly to your bank account.

You then pay monthly installments based on the loan terms, and when your loan is paid-off, SALT releases your collateral from the smart contract and returns it back to you.

SALT Oracle

The SALT Oracle creates the smart contracts for each loan and triggers the events of the loan. To lower the risk of default, the Oracle also records loan payments and monitors the changing value of the crypto collateral.

Every loan starts with a loan-to-value ratio that’s calculated from the terms of the loan. This ratio is effectively the amount of the loan divided by the amount of collateral. For example, a $100,000 loan secured by $125,000 worth of Ethereum would have an original loan-to-value ratio of:

$100,000 / $125,000 = 80.0%

As you pay off the loan, this ratio decreases because the amount of the outstanding loan decreases. However, if the value of your collateral decreases due to a decline in the market price, this ratio will increase.

If the ratio ever increases beyond the initial loan-to-value ratio, you’ll be required to either:

provide more collateral, or pay-off an additional amount of the loan

until the ratio returns to the original level.

The Oracle autonomously tracks the loan-to-value ratios and notifies the borrowers when it becomes too high. The amount of time a borrower has to correct the ratio differs based on the velocity of the price decline.

SALT team & progress

The SALT team is over 15 members strong and is led by Shawn Owen as CEO. Owen is a serial entrepreneur with years of experience in hospitality operations. The most notable member of the SALT team is one of their advisors, Erik Voorhees. Voorhees is the founder and CEO of ShapeShift – one of the most popular crypto-to-crypto exchanges.

SALT reached a big milestone this January by officially beginning to provide loans for top-tier members. The platform already has almost 50,000 members and has funded over $7,000,000 in Bitcoin and Ethereum backed loans.

This year, the team is planning on launching credit cards, creating loan funds, and expanding collateralization to other alternative coins as well.

SALT is the current leader in blockchain-based loans; however, there are a few other competitors popping up in the space. ETHLend and Elix both recently completed their ICOs and provide decentralized lending on the Ethereum blockchain.

SALT differentiates itself by focusing on institutional cash loans that are backed by cryptocurrency while the other two projects appear to have taken a peer-to-peer approach. Both use-cases should have a solid place in the market.

SALT token

SALT tokens, also known as membership tokens, are ERC20 tokens that you spend to become a member of the SALT lending platform. Furthermore, you can redeem these tokens to pay down loan interest, receive better rates on loans, and purchase items from SALT’s online store.

These tokens currently hold a different value on the lending platform than what they’re trading for in the market. They’re worth exactly $27.50 on the lending platform while only trading at ~$12.00 in the market (as of this writing).

SALT (SALT)

7.95 USD (4.75%)

0.00070829 BTC 7.95 USD (4.75%)0.00070829 BTC RANK 68 MARKET CAP $416.83 M USD VOLUME (24H) $15.11 M USD Powered by CoinMarketCap

Currently (but not for long), you can also pay-down the capital of your loans with SALT tokens.

This creates an interesting arbitrage opportunity. If you have the bankroll, you could technically get an Enterprise membership for $1200 and take out a $1M loan backed by $1.25M of Bitcoin. You could then turn around and buy $1M worth of SALT tokens from the market (~83,333 SALT).

Because the SALT tokens are worth $27.50 on the platform you would only need to spend ~45,455 SALT tokens to pay back your loan. This leaves you with a little under 40,000 SALT tokens plus the original Bitcoin you put up as collateral – about a 40% return.

Unfortunately, The ability to pay-down your loan’s capital using SALT tokens appears to be a temporary measure to reward early investors and will likely be removed as the platform opens up to more borrowers.

Trading

SALT held their ICO in Q3 2017 in which you could purchase a membership token for $3.00 – $7.00 depending on the time that you bought it. There are a total of 120M SALT tokens, and 54.5M are currently circulating in the market.

The SALT price briefly experienced the common “post-ICO” dip before spiking back up to a little over $7 in October 2017. Shortly after, the price fell to the $2-$4 (0.0003-0.0005 BTC) range and stayed there until December 2017.

Starting in December 2017, the price steadily rose and recently jumped to an all-time high of over $17with the announcement that lending on the platform had finally begun.

With the current gap between the market price and the price of SALT tokens on the lending platform, the price should continue to rise until this gap is closed. However, you should remember that the crypto market is irrational, and anything could happen.

Where to buy SALT

The most popular exchanges to purchase SALT are Binance, Bittrex, and Huobi. To trade for SALT on one of these exchanges you need to first have Bitcoin or Ethereum.

If you don’t have either, you can purchase them with traditional currency on an exchange like Geminiand then transfer them over.

For a full list of exchanges where you can buy SALT, check out CoinMarketCap.

Where to store SALT

Because SALT is an ERC20 token, you have a few different options on where to store it. A popular online option is MyEtherWallet.

The SALT website recommends that you use the Jaxx wallet and even provides instructions here. Jaxx is available on Android, iOS, Mac, Windows, Linux, and as a Chrome extension.

The most secure way to store your tokens is by using a hardware wallet like Trezor or the Ledger Nano S. Using hardware wallets keeps your funds offline and out of the reach of hackers and ill-intended software.

Conclusion

The SALT lending platform is a great option if you want/need to make some real-world expenses and don’t want to lose the potential gains from your crypto holdings. Beyond that, the project works to solve a major problem of blockchain assets – illiquidity. By opening up an entirely new form of loans, the project brings more liquidity to the cryptocurrency market.

The team has a solid foundation of blockchain experience and is advised by a leader in the industry. With a working platform in the market already, SALT is ahead of many other blockchain projects.

Soon, the SALT lending platform will be open to all tiers of borrowers looking to take advantage of this groundbreaking service further bringing together the worlds of crypto and traditional finance.

Additional SALT Lending resources

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