How MELD Labs is Using Collateralized Debt Position to Provide Financial Freedom
For most people, if not everyone, achieving financial independence is the goal. Financial independence typically entails having enough savings, investments, and cash on hand to live the life we want for ourselves and our families. It entails building up savings that allow us to retire or continue the profession of our choice without being constrained by a yearly paycheck.
To do this, it is essential for everyone to have equitable access to financial services and avoid becoming susceptible to mounting debt, monetary emergencies, excessive spending, and other issues that prohibit us from achieving our goals.
It is therefore critical for everyone, not only centralized institutions, governments, or the 1%, to take control of their financial lives and have equal access to financial instruments used by experts. As much as this is supposed to be the bane of any civilization, sadly, it is not the case in reality.
Individual lending and borrowing are presently slow, complex, and bureaucratic processes in traditional financial institutions. It is inefficient in terms of capital. Consumer lending is exploitative and typically leads to higher levels of indebtedness, while commercial credit is inaccessible to ordinary people. Defi makes these tools available to the general public and automates, secures, and composable the entire loan and borrowing process.
While Defi is bridging the gap through cryptocurrency, up till now, the relationship between crypto and fiat remains in two parallel lines. MELD is constructing a virtual network that will benefit both crypto and fiat liquidity providers by utilizing a world-class Defi protocol.
MELD is a decentralized and trustless lending/borrowing and liquidity providing protocol powered by the MELD token and implemented on the Cardano Blockchain. They lend fiat currency to borrowers who pledge their cryptocurrency as collateral in a MELD Smart Contract.
The lender earns a high-interest rate from safe assets, while the borrower can keep and grow their crypto holdings. To earn revenue, the company stakes the collateral in community-managed liquidity pools, which are split 50/50 between MELD and MELD token holders.
The goal is to provide the public, particularly the unbanked, financial independence and control.
About MELD Labs
MELD is an open-source, non-custodial liquidity protocol that allows users to borrow fiat (USD and EUR) against crypto collateral while also earning interest on their deposits. The MELD token is used for protocol governance and can be staked to earn yield. It is the first decentralized protocol to integrate fiat lending into the cryptocurrency ecosystem. This allows for low-friction trades between crypto and fiat holdings while keeping digital asset control.
With an Android device, anyone can connect with the MELDapp on iOS, and in the browser to quickly access their digital assets to lend, borrow, and administer MELD’s services. Users get peace of mind because they always have access to their assets.
When compared to centralized blockchain solutions and traditional fintech, MELD delivers significant capital efficiency improvements in lending and borrowing. It is a third-generation blockchain with low-cost, high-speed transactions and a security fund of more than fifty billion dollars in Cardano (ADA).
MELD is built on the Cardano blockchain, makes use of transaction efficiency to save fees by more than ninety-nine percent when compared to ETH-based alternatives.
How MELD Operates
According to statistics, about two billion people worldwide are either underbanked or have no access to financial services at all. Despite these people paying the greatest fees, they often receive the worst customer service and are faced with enormous difficulties. This is why MELD desired to provide an enabling channel for these vulnerable individuals to have access to the fifteen trillion dollars currently locked out of the global economy. To achieve this, they created two important services and three products. These include:
The MELDapp is the heart of the MELD protocol, and it’s meant to have a friendly user interface for both consumers and retailers. The app makes it natural to comprehend and simplify the process of lending cash, borrowing fiat, and depositing crypto.
● Fiat Money Loan
A user must first deposit his cryptocurrency as collateral with MELD to begin with. The protocol will then generate a Collateralized Debt Position(CDP) with the deposited cryptocurrency. The terms of the loan are recorded in a smart contract, which is stored on the blockchain. Once validated, the protocol will send a wire transfer to their bank account in the requested amount of fiat. The MELDapp will allow users to manage their CDP directly.
● Fiat Self-Paying Loan: MELD uses this product to capture some of the trading fees earned by DEX aggregators using our swap liquidity pools, which serve as a solution that can provide customers with self-repaying loans. These charges are applied to the loan’s repayment over time. Going by the standard of MELD calculation, repaying a $100,000 loan will take between three and six years, depending on market conditions.
● Crypto-backed Credit Line: The Crypto-Backed Credit Line is a useful and versatile tool for managing fiat financial needs while only paying interest on the amount of fiat spent.
● Fiat Debit Card: MELD protocol users will be able to utilize their cryptocurrencies to buy products and services without having to exchange them for fiat currency for the first time.
Access to finance is the availability of reasonable and quality financial services at acceptable pricing. As a result, broad financial services access indicates that there is no cost or cost constraint to accessing financial services. This is comparable to the notion of financial inclusion, which states that everyone has access to basic financial services. As a decentralized and trustless lending protocol, MELD is bent on providing an ecosystem that allows people to reclaim control of their finances by giving them the tools and resources they need to manage their money on their own terms. MELD allows anyone to lend and borrow crypto and fiat quickly, safely, and transparently.
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