Salt is an online blockchain lending platform. Salt loans are made to holders of cryptocurrencies who want to leverage their holdings for cash, while not selling their cryptocurrencies.
For a borrower, one of the benefits of holding a cryptocurrency such as Bitcoin is that holdings may have appreciated significantly against a basis.
For a lender, one of the benefits of lending against a cryptocurrency is that the value should be simple to verify due to the transparency of the public blockchain.
As such, Salt connects borrowers and lenders via the Salt platform.
Salt can verify cryptocurrency holdings of a borrower and make loans against the value of those holdings.
The crypto assets are collateralized and the borrower does not have to sell his or her cryptocurrencies.
The assets are held by Salt for the duration of the loan, which may be prepaid.
Salt holds the cryptocurrency collateral using a combination of “hot” wallets and cold storage.
What is a Salt Margin Loan?
A salt loan is similar to borrowing money from a stock broker on margin.
In a traditional stock brokerage account, a margin loan lets you borrow money against the value of your shares. For instance, say you owned 100 shares of Apple (AAPL) at $170 per share… Your AAPL holdings would be worth $17,000.
In a margin account, you could get your broker to loan you $10,000 against the value of your AAPL shares. You could then use this money to invest in other securities that you believed would increase in value.
On the positive side, a margin loan can help you increase your returns. On the negative side, a margin loan can also magnify your losses.
If for some reason your AAPL shares fell by 50% in value, you would receive a margin call or your shares would be sold by the broker to cover your margin loan.
Similarly, Salt uses your cryptocurrency as collateral, or security.
Salt Cryptocurrency Margin Loans
Salt offers cryptocurrency margin loans. To participate, you sign up at Salt Lending, choose a membership level, purchase some Salt and post your cryptocurrency up as collateral, as you would in a stock brokerage.
A lender on the Salt Network loans you money at a rate of interest.
If the value of your holdings falls below a certain threshold, you may be required to make a margin call. A margin call requires you to sell your cryptocurrency, or to put up additional collateral to back your loan.
In some cases, if the value of your cryptocurrency collateral falls below a danger threshold, the cryptocurrency could be sold.
Is Salt Similar to LendingClub?
Salt is similar in concept to LendingClub, in that it also is a platform for connecting lenders and borrowers. If you are a borrower, you can put your cryptocurrency assets up as collateral and a lender can loan you money against their value.
If you are interested in participating as a lender, you can inquire about becoming part of the Lender Network by contacting Salt at Support@SaltLending.com.
Lenders can inquire about participating in the Salt platform, but they must be accredited investors, per Regulation D.