Our Short-Term Interest Based Portfolio consists of providing loans to individuals and corporations by securing digital assets as collaterals. In this new age of innovation sparked by Distributed Ledger Technology (DLT), people are beginning to invest or buy into a new asset class, ie. digital assets.
These people who hold digital assets in their portfolios, are often faced with a problem of limited liquidity. In this cash based digital economy, people may not have sufficient liquidity to operate a business or maintain day-to-day operations. Hence, selling digital assets is the only solution to lack of fiat money.
Any individual or legal entity with fiat money can become a lender on the LBN. To give a loan, the user needs to deposit fiat money into his/her personal account in the LBN in any convenient way – SWIFT, SEPA, bank card. As the platform develops, the ways of replenishing the account and withdrawing money will expand.
Once the application is complete, the lender will also be subjected to KYC and AML measures, before the loan begins, thereon, interests will be accrued.
The borrower must deposit cryptocurrency into his/her personal account within the LBN, to qualify to borrow a loan. The borrower, during the application, will have to indicate:
During the loan term, its costs as an interest rate can be offset by an increase in the cryptocurrency value. As such, borrowers will be able to not only retain the blockchain assets, but also to gain any appreciation in value of these assets.
The standard Loan-to-Value (LTV) ratio is 60% due to the volatility nature of cryptocurrency. This means that no more than 60% of the market value of the borrower’s asset can be borrowed. If the market price depreciates to a point where the LTV reaches above 60%, the borrower will have to deposit more cryptocurrency into his/her account to bring the LTV back to 60%, or the LBN will auto liquidate the collateral, to bring the LTV back to 60%.
When market price appreciates, the borrower may choose to pay off the instalments using the gains from the cryptocurrency. This can be done when the borrower agrees to allow the LBN to liquidate a portion of the collateral that is due.
The borrower will repay the loan monthly and on time, otherwise, additional interests and fees may be charged. Repayment can be made using fiat money or cryptocurrencies of the same value. If the borrower is unable to repay the loan, he/she must be able to refinance it, otherwise a part of the collateral will automatically be sold to repay the monthly payment.
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