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Crypto Lending Has a Much Higher Demand Than We First Expected

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Crypto-backed lending is on the rise, and it is adopted even faster than one would first think, especially among institutionals.

Providing new use-cases for digital assets, cryptocurrency lending is more popular than ever. Crypto lending is one of the major forces driving the fast-growing DeFi industry, but institutional service providers are also gaining a foothold on the market.

What Does Crypto Have to Do With Lending?

To start with, let’s see what a crypto-backed loan is.

A digital asset-backed loan works very similarly to a mortgage where property is used as the collateral for the borrowed amount.

The process here is very straightforward. The user locks his cryptocurrency holdings and borrows fiat currencies or stablecoins against them. After he repays the interest and the principal to the lender, his crypto collateral is transferred back to him.

However, compared to the general market’s asset-backed loans (e.g., property- or gold-backed loans), cryptocurrency has some features that make it unique.

Since they operate via blockchain networks, digital assets are very easy to validate. Lenders don’t have to fear that borrowers use counterfeit gold bars or tricks to overvalue their property and hire an expert to minimize their risks.

As the process lacks third-party evaluators, crypto-backed loans are issued very fast and without any extra costs.

And, due to the overcollateralized nature of crypto-backed loans, the process also lacks credit checks. Since the borrowed amount is less than the collateral value, lenders can still mitigate their risk if a borrower fails to repay the sum he owns or if his assets  decrease in value significantly.

Furthermore, as cryptocurrencies like Bitcoin or Ethereum are digital assets, they are a lot easier to transfer than physically carrying a bunch of gold bars in an armored car to an underground safe to keep them secure.

Also, if you run out of money, you can’t pay the rest of your property-backed loan with a part of the house. There’s no way a bank would accept the kitchen or the kids’ room as a payment. But with Bitcoin, you can easily pay back the loan with a part of your digital asset collateral.

Furthermore, while many criticise crypto for its increased volatility, this aspect of digital assets is what allows borrowers to potentially expect profits from their collateral while getting a loan for their needs.

Crypto Lending: to DeFi or not to DeFi?

Crypto-backed loans come in two forms: decentralized solutions managed via smart contracts and services where a third-party provider is responsible for connecting lenders and borrowers.

In most cases, it’s a tough job to choose which crypto-backed loan type to offer, especially for the industry’s newcomers or non-tech people.

Personally, I really like the movement which DeFi represents, and decentralized finance solutions provide some excellent use-cases for crypto. DeFi has another strength that creates tremendous value, which is the ability of digital asset developers and projects to test new business models and technologies quickly.

However, to get involved in the current DeFi industry, one has to possess the necessary technical knowledge and skills. This drives away beginners in most cases and may cause some serious headaches even for people who are well-versed in crypto.

These individuals and businesses are looking for a plug-and-play solution where they are in contact with a regulated entity. And institutional lending, where a professional crypto service provider manages the service, is the best way to serve these customers.

What Are the Demand and the Use-Cases for Crypto-Backed Lending Services?

According to DeFi Pulse, there’s currently $5 billion of digital assets locked in decentralized finance lending protocols.

It’s clearly a sign that the demand for crypto-backed lending solutions is gradually rising.

I realized that crypto loan adoption is going very rapidly, probably even faster than I thought at the time we launched our loan service.

For that reason, we estimate the crypto lending industry to reach $100 billion in yearly issued loans by 2021 if cryptocurrency prices stay the same.

As soon as we announced our service, we received a massive amount of requests from several institutions, such as hedge funds, family offices, mining corporations, and other corporate clients.

Interestingly, organizations that we previously considered conservative and traditional showed their interest in crypto-backed lending while being aware of the technology, the risks, the regulatory environment, and the potential benefits of such solutions.

Regarding the use-cases, there is a major difference between traditional and crypto-backed lending solutions. Contrary to the prior services, customers do not borrow digital assets exclusively when they need extra capital.

As a crypto borrower, you hold an asset and use a lending service to get more from this instrument. In addition to “HODLing” BTC, you could also start a new business, upgrade your mining farm to increase its revenue, hire new teammates, or invest in new assets. And you do all this while keeping the same BTC amount in your wallet.

How Does the Regulatory Environment Look for Crypto-Backed Loans?

Two years ago, crypto-backed lending was considered a grey zone where most companies operated without a license.

However, as the industry evolved, digital asset lending has become a fully regulated field by now. And multiple governments are getting increasingly involved in crypto lending’s regulation.

A great example is Gibraltar’s government that has recently established a regulatory framework for blockchain companies.

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Author: Anton Chaschin

Commercial Director at CEX.IO LOAN. A business development professional with experience in trading and financial markets. As part of CEX.IO Group, Anton is leading the development of several products. This includes the LOAN project that offers lending of fiat money with cryptocurrencies used as collateral.



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Tesla’s Elon Musk and Twitter’s Jack Dorsey Engage in Banter on Social Media Regarding The B Word Event

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The humorous banter resulted in Dorsey inviting Musk to an open B word event stating that he can have all his “curiosities” sorted there.

Twitter and Square CEO Jack Dorsey was seen endorsing Bitcoin in a recent tweet that attracted the attention of Tesla‘s Elon Musk which resulted in a humorous Twitter banter about the B Word event to destigmatize bitcoin trading.

Jack Dorsey tweeted in response to an event hosted by B Word Initiative, an organization that works to streamline the importance of cryptocurrency in the domain of digital financing and aims to “destigmatize allegations and doubts against crypto and BTC trade.”

The tweet propagated Dorsey’s inclination towards crypto and stated how many international companies and organizations have been experimenting with crypto transactions. He further invited the audience on Twitter to a B Word event where an open talk regarding crypto was scheduled to take place. The tweet was able to capture the attention of Elon Musk who responded by stating “bicurious” in the comments with a sense of cheekiness. This incited a funny comeback from Dorsey’s side which included an open invitation for Musk to attend the B Word event.

Elon Musk and Jack Dorsey to Have Engaging Conversation on The B Word Event

The humorous banter resulted in Dorsey inviting Musk over an open B word event stating that he can have all his “curiosities” sorted there. Musk further responded to Dorsey with a chuckling response that instigated the witty exchange between the two CEOs.

Previously Elon Musk had announced in May that Tesla will not accept any Bitcoin for car purchases citing the reason for increased carbon emissions occurring due to bitcoin mining. Musk’s announcement in may had resulted in falling of BTC prices however he resumed BTC services shortly after the open declarations and advised miners to use renewable energy sources to mine Bitcoin. The recent exchange between Musk and Dorsey expresses that Bitcoin still is a topic of interest for both of them.

Dorsey’s tweet following Musk’s response went viral in due course where Musk was later seen commenting on “pure gold” on Dorsey’s “Let’s talk” comment which enabled the Twitterati’s to suspect an ambiguous mention of Peter Schiff in the post thread, who actively propagates investment in gold as a profitable alternative to Bitcoin.

Dorsey, being an active proponent of BTC, was recently seen inviting Elon Musk over a “chat” on a B Word Show on Twitter. This B Word initiative is a premium platform that assists in making people realize the growing value of BTC and other crypto variants. The initiative intends to “destigmatize” the doubts surrounding cryptocurrency and make it more mainstream for people to have access to and create more awareness regarding BTC mining and trading activities.

Musk and Dorsey’s impromptu Twitter jest resulted in Dorsey actively approaching Musk, and having an immersive conversation on how institutions and organizations can embrace Crypto trade and adapt the growing BTC mining as a prospective future currency.

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Juhi Mirza is an archaeological major who is obsessive about blockchain/Crypto technology and deems it to be the foundational philosophy of the future. Her dogged ability to research and crystallise technical facts/multiple perspectives into rivetting stories makes her an accessible finance writer. She tends to her archaeological pursuits and loves unearthing the past over the weekends.



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Priority Queue for CoinList Token Sales Revealed

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According to CoinList, the Priority Queue is a scheme that seeks to reward validators, stakers, miners and other registrants, and other people who could have helped with the growth and success of the token.

The Priority Queue for CoinList imminent token sales has been revealed by the company. The Priority Queue is an invite-only queue that consists of invitees with a higher chance of securing an allocation over the normal or regular invitees, even though allocation is not automatically guaranteed. The Priority Queue will also be significantly shorter than that of the main token sale queue (which reportedly will be hundreds of thousands) and will run in parallel to the main queue

According to CoinList, the Priority Queue is a scheme that seeks to reward validators, stakers, miners and other registrants, and other people who could have helped with the growth and success of the token. Most of these people are normally turned away in a token sale by missing out on an allocation. “This is a lost opportunity for token networks seeking to grow strong communities,” CoinList stated in an official statement on their website.

“To address this, we’re rolling out a Priority Queue feature that allows token networks to give priority to their core group of contributors as well as to CoinList community members, who have demonstrated a long-term commitment to token networks,” the statement reads.

According to CoinList, the Priority Queue invites for CoinList community members are based on a points system that recognizes value-add activities. The greater your contributions are to token networks on CoinList, the more points you earn. However, not all users will receive an invite to the Queue. “At this time, we’re limiting invites to those with the most points so that the Priority Queue is less than 1% of the total number of sale registrations,” the statement said.

According to CoinList, their Value-add activities fall into three categories or tiers, with Tier 1 weighing the most points, while tier 3 yields the least. To be in the Tier 1 class, an invitee would have to have participated in a validator/miner/grant program or a hackathon on CoinList.

Tier 2 users would have to have participated in early CoinList token sales (before 2021), worklocks, lending programs, and staking whiles Tier 3 consists of users that have traded on CoinList through CoinList.co, CoinList Pro, CoinList Mobile app, OTC, and WBTC conversion.

CoinList added that they will continue to improve on the Priority Queue and plans to add more features to the points system as time goes on as the firm will get to learn about what works best for the token network teams and their sale participants.

Read more news from the crypto industry here.

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Crypto fanatic, writer and researcher. Thinks that Blockchain is second to a digital camera on the list of greatest inventions.



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Chainalysis Raises $100 Million at $4.2 Billion Valuation

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As outlined by Chainalysis, the latest cash injection will be used to deepen its data advantage by covering more cryptocurrencies, and focusing on emerging niches including decentralized finance (DeFi). 

Blockchain analysis company Chainalysis has announced the completion of its Series E funding round in which it secured an additional $100 million from investors. According to the official announcement Chainalysis, the Series E funding round was led by Coatue and brings the company’s total valuation to $4.2 billion.

As revealed, previous backers including Benchmark, Accel, Addition, Dragoneer, Durable Capital Partners, and 9Yards Capital added to their stake in the company. Accordingly, the funding round also saw participation from other investors including Altimeter, Blackstone Group Inc (NYSE: BX), GIC, Pictet, Sequoia Heritage, and SVB Capital.

The use of blockchain technology and its attendant innovations particularly cryptocurrencies is growing. While there has always been a sustained retail adoption of the emerging monetary innovation, institutions are beginning to show interest in the growing asset class. However, the rate of adoption is marred by the lack of transparency in using Bitcoin (BTC), and other altcoins, as well as the potential risks of being used for illicit transactions. These fears are compounded by regulators, who often warn against the integration of this tech.

Chainalysis is building the technology to allay the fears of usage of crypto on the part of investors, and to aid regulators to track illicit transactions accordingly. The company is building compliance software that enable government agencies and private sector businesses across the world to detect and prevent cryptocurrency crime and money laundering. The invaluable nature of Chainalysis’s product has drawn in over 300 clients, spanning both government, businesses, and general crypto users.

“Chainalysis’s data platform is core infrastructure which helps to create a safe and thriving cryptocurrency market,” said Kris Fredrickson, Managing Partner at Coatue. “As cryptocurrency adoption grows, we believe that financial institutions, government agencies, and cryptocurrency businesses will increasingly deploy Chainalysis’s platform to make important decisions – from figuring out the best way to dismantle the operations of a threat actor to deciding which new cryptocurrency products are likely to drive the most demand.”

Chainalysis to Build Out and Focus on Its Expansion Following the Funding Round

As outlined by the company, the latest cash injection will be used to deepen its data advantage by covering more cryptocurrencies, and focusing on emerging niches including decentralized finance (DeFi).

Additionally, it noted the readiness to develop collaboration tools in its suite of software solutions so that public and private sector teams can work together from the same data set with a consistent, shared understanding. The firm is also seeking to provide direct access to Chainalysis data through APIs so that government agencies, financial institutions, and cryptocurrency exchanges can combine Chainalysis data with information from within their enterprises to make better decisions.

Beyond the product development, the company says it will hire hundreds of positions to promote its global expansionary drive. In all, Chainalysis is set to foster the speedy embrace of crypto and blockchain through the provision of data that can help eliminate threats in all forms.

“The future of finance and national security will be based on blockchain data-driven decisions,” said Michael Gronager, Co-founder and CEO, Chainalysis. “We’ve harnessed the transparency of blockchains to provide actionable insights into markets, threats, and business opportunities.

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Benjamin Godfrey is a blockchain enthusiast and journalists who relish writing about the real life applications of blockchain technology and innovations to drive general acceptance and worldwide integration of the emerging technology. His desires to educate people about cryptocurrencies inspires his contributions to renowned blockchain based media and sites. Benjamin Godfrey is a lover of sports and agriculture.



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