SALT (Secured Automated Lending Technology) is crypto-based lending company, which for a crypto collateral, will lend the borrower cash. The borrower can then make payments to pay back the loan or forfeit the crypto collateral in exchange for the debt to be cleared.
The idea behind the loans is for long-term HODLers to maintain their long positions, without losing possible profits and to avoid taxes levied against them for selling. Essentially it is a way to make use of crypto’s equity without having to sell it.
Balance the ledger
SALT had a 15-day ICO that ran from Aug. 1 to Aug. 15, 2017, and it raised more than $45 mln from its fundraiser. Its market cap is $75 mln and the current token price is $1.25 down 82 percent from its entry of $6.91 on Sept. 29, 2017. CoinMarketCap ranks it at 121 on its charts. SALT did see an all-time high of $16.72 in January 2018, when the crypto market was experiencing massive investment, only later to experience a massive fall in value over the first quarter of 2018.
Traditional loans are the way for many to borrow money with terms and conditions that are regulated by government. Banks are required to be able to meet a laundry list of requirements to be able to lend.
Conversely, there are predatory lenders in the US such as payday loans or automobile title loans, which loan money to often poor consumers, who either pay high interest (20-30 percent) or having their automobile taken to pay the debt.
So how does SALT do it? While not readily available on the website, interest rates on the loans vary between 10 percent and 15 percent, depending on the terms of the loans. When borrowers apply for a loan, the available options are then presented and they can choose among them.
Not the ideal scenario for someone who wants to shop around first before committing to a loan agreement, however, if the borrower decides to split with the cash SALT just liquidates the crypto to get back its cash.
Membership fees to borrow?
SALT tokens are used to pay for your membership in the SALT system; it is a tiered annual fee that varies based on the size of the loan. At the bottom is one SALT that covers up to $10,000 and at the top it is 100 SALT to borrow over $1,000,000 with various tiers in between.
This is rather a new ploy for the lending business, paying an annual fee just to be able to borrow money.
Suspended memberships and low liquidity
In February this year, SALT suspended new memberships and loans. It seemed that low liquidity was an issue. We wanted to learn more but about this challenge, but we were unable to get a response to our questions. Some other interesting things that we would have liked to have known were:
How much have you been able to lend since starting?
How have repayments been? Do you find your borrowers are repaying or are you keeping the collateral crypto?
These questions, answered, would have given us better insight into how the company operates and how their lending practices are trending in terms of paybacks or asset liquidation.
Competition ventures into new frontiers
While the lending market is highly regulated around the world, SALT has invented a unique workaround. However, as this type of lending gains more popularity with crypto enthusiasts, SALT could find more competition cropping up to dilute their market share.