Lending an ear to the Lastest Lending Platform

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Understanding the speculative cryptocurrency market, Money Token - a blockchain-based financial ecosystem, is hoping to solve the demand for short and medium fiat loan.

In recent years, cryptocurrencies have been known for its high growth rate in short amount of time (such as Ethereum Classic 20% growth over one night after coinbase announcement listing) which often contribute for both speculative nature of the market, and the high sensitivity derived from decentrality. For what ever reasons, crypto "hodlers" aren't very willing when it comes to saying good bye with their coins.  

If a crypto asset holder spends his coins or tokens today then he could not take advantage from the rising value of this asset in the future. It is the problem for not only cryptocurrency but also any other kinds of asset that many have potential rise in value. Investors will want to buy asset at low price, speculate them until their value increasing and sell them with the higher price. However, if they did sell their crypto assets, they would no longer own them to benefit from their potential increasing value.

Is there any solution for this problem that helps users to keep his crypto but also can access to liquid currency? Actually there are many ICOs now targeting this problem, and Money Token is one of the most promising ICO in this field.

And what better ways to fully understand this problem from the exact words of its representative. Below are the result of Nami.today Q&A session with one of Money Token representative:  

Q: How can Money Token platform neutralize the risks if the collaterals value volatiles? The White paper said "automatic control of risks is a primary advantage of the Money Token platform". How can you automatically control the risks? By Amanda or any other instruments?

A: All loans are over-collateralized and protected by higher amount of the collateral.

Recommended and standard RtC (Repayment to Collateral ratio) is 50%.

It means you will deposit $10,000 in BTC, you will receive $5,000 in loan.

If BTC rate will fall, for example to $7,000 - it’s ok for you, for the platform and for the lender.

At this moment Amanda will start notify and alert you about the risk of price drop of your collateral to $5,000 and loan liquidation. You will have several options for you to choose:

1) Deposit additional $3,000 in BTC to your collateral. In this case your loan will be in safe again coz RtC is stabilized to 50% again.

2) Repay part of your loan. Your debt is $5,000. You could repay $1,500, your debt will decrease to $3,500. And the value of your collateral is $7,000. It means that RtC is 50% again.

3) You could do nothing, maybe you sure that BTC will rise in value again soon and you shouldn’t take any actions on your loan.

In сase if your collateral value will fall till $5,001 it is still okay for all parties.

But if the value will fall till $5,000 - the platform starts to liquidate the collateral on exchanges.

For lender it means that he will receive his USD.

For borrower it means the stop loss and close of the deal.

(if the borrower doesn’t use the platform and just holds his BTC in situation of so huge market drop he will lose more, because his BTC will decrease in value less than $5,000. Maybe to $3,000/$4,000. So the platform helps him to sell it on a higher price before the huge price drop.)

Q: The White paper also said that “The loan funds are backed by the collateral. A repayment-to-collateral (RtC) ratio of 30% to 70% can be set by the client. The 50% ratio is considered optimal based on retrospective analysis of Bitcoin fluctuations”. I did asked Kim about what this sentence means. However, I need to confirm my way of understanding. Can you explain more about it? Why is it set by client but not by the platform?

A: Borrowers could choose RtC (Repayment to Collateral ratio) from 30% to 70%. RtC doesn’t affect the platform or lenders interests. It affects only the borrower’s interest, so this option is on the borrowers choose.

A recommended RtC is 50% for all users.

Q: What is the difference in IMT and MTC role? Can you explain more about your stable token MTC? And when I asked Money Token telegram admin Kim, she answered me that “MTC is a stable token. It will be used for issuing loans to Borrowers”. Does it mean that when I borrow for example 1,000 USD, I will receive 1,000 MTC then I have to convert it to USD at your internal exchange? Why don’t you give USD directly to your borrower instead of MTC?

A:  MTC that is our stable coin.

Users will be able to choose any currency from the list:

1. USTD (Tether Stablecoin)

2. Dai (Maker DAO stablecoin)

3. MTC (MoneyToken stablecoin)

4. BTC/ETH/BCH/other volatile currency

5. Fiat currencies (USD, JPY, CNY and others)

80% of users need loan not in fiat, but in cryptocurrencies, because they need credit funds to spend them inside the market.

For example:

- Investors need ETH to invest in ICOs

- Miners need BTC/ETH/stablecoins to pay for the mining equipment

- Day traders need USDT to fix their investment position

- ICOs need cryptocurrency loans to pay for the marketing, 3rd party companies, market making services, etc.

Why we need MTC?

Because:

1. USDT, the most famous and demanded stablecoin on the market is centralized, depends on banks and probably could do exit-scam any day.

2. Dai is a nice stablecoin, but it is not in demand yet, its model has a lot of lacks and DAI is very complicated to use for users.

3. We need our own stablecoin to don’t depend on USDT and DAI.

We have the vision of how to make MTC stablecoin better, decentralized, trust-free and convenient for users, comparing with DAI and USDT.

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Q: I read in your whitepaper that “Collateral funds will be deposited in protected multi-signature wallets requiring 3/4 signatures to access. One signature is owned by the borrower at all times, one owned by the lender, 3rd and 4th are owned by the Money Token arbitration service.” What would happen if (I assume as a reporter only), Money Token colludes with a lender to take 3 out of 4 signature to access the fund?

A: MoneyToken is an independent 3rd party, it is an escrow in a deals between the borrower and the lender.

So if the borrower disappears and not repay the loan in time, the platform should give its 2 keys to transfer part of the collateral to the lender to compensate him.

In other case, if the borrower will repay his loan in time, but the lender is disappear or didn’t want to return collateral to the borrower, the platform should give its 2 keys to transfer whole amount of the collateral back to the borrower.

Q: What do you do with the fund that a lender deposits in your platform? How can you gain profit from it?

A: Lenders deposit only credit funds to lend borrowers.

Borrowers deposit collateral funds. The platform is an Escrow and not allowed to do anything with these funds. Ownership of the collateral belongs to the borrower.

So MoneyToken stores it securely till the repayment of the loan.

Q: Does your platform apply blockchain technology? How is it applied in your platform?

A: Yes, of course. The platform is a bridge between borrowers, lenders and cryptocurrencies. We have our own 3/4 multi signature technology, which makes our platform decentralized and trust-free.

Because all other platforms centralized, require a trust and users are afraid to deposit collateral funds because they are not sure in a safety of these funds.

Q: What is the role of Amanda Assistant? Is Amanda in working now?

A: The platform’s role to notify borrowers about decreasing the value of their collateral (that is Amanda’s work) and to liquidate collateral funds in time.

All these processes are absolutely automatic.

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Q: Why do you describe your platform fully decentralized? I think it is centralized as it depends much on your platform, isn't it?

A: The platform is a bridge between borrowers, lenders and cryptocurrencies. We have our own 3/4 multi signature technology, which makes our platform decentralized and trust-free.

Because all other platforms centralized, require a trust and users are afraid to deposit collateral funds because they are not sure in a safety of these funds.

Btw, we have applied for a patent to protect this technology from centralized monopoly.

Interview by nami.today

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