The underlying technology of Blockchain is developing in depth, and the application scenario is becoming more and more diversified. As an example of the mature application of Blockchain technology, crypto has been endowed with multiple connotations since its birth and is regarded as the value circulation medium in the age of Value Internet. Whether from the investment or the circulation aspect, the crypto's development space is rapidly expanding.
Corporate investors have been in the crypto field since 2017. While the cryptocurrency price has been sharply swung in recent years, corporate interest in the crypto represented by Bitcoin has not declined.
Crypto is in urgent need of innovative playing methods when the demand for market investment is surging after the current functions, such as investment, payment and financial management are mature. As an important way to drive the liquidity of asset in the market, the crypto pledge loan has been widely acknowledged by the market investors.
"We know that in 2018, the demand for pledge loan in the crypto market increased dramatically, especially around BTC. The industry's demand for pledge loan in crypto is also diverse. For example, crypto users are optimistic about the value of one currency and do not want to sell their currently holding currency; miners need more cash flow to expand production; some companies raise funds in the form of crypto and need to use fiat currency for capital turnover. " A senior investor pointed out that a professional and reliable crypto pledge loan platform has become the preferred choice of investors.
In this context, the crypto wallet service providers, represented by HyperPay, began to explore the crypto mortgage loan mode, and it created the crypto mortgage loan product "BitLoan", which drives the crypto holders to continuously obtain the circulation value of cryptos.
"Cryptos based on Blockchain technology, with its unique digital characteristics, is different from traditional physical assets. The existing technologies, processes, risk control and other modes deeply relied on by traditional financial institutions limit the service channels, products, time, space and other elements, making the whole financial service process very cumbersome and inefficient," said the chiefs from BitLoan. HyperPay combines the characteristics of cryptos to establish an online one-stop financial integrated service system from the perspective of user experience and asset security, ensuring the ultimate experience of users at the operational level.
Crypto Pledge Loan, Drive the Efficient Circulation of Asset Value
On May 12, the most remarkable event in the industry was Bitcoin's completion of the third half reduction in its history. And just before that, on May 10, Bitcoin suddenly plummeted after several days of big gains. In 24 hours, 42000 people lost their positions, with the amount of liquidation reaching 834 million US dollars, equivalent to nearly 6 billion yuan. The price fluctuation of Bitcoin during the third halving, made investors who went short in mortgage loan stuffed with big gains.
As the crypto financial service being the important strategic direction of Blockchain industry, hedging, leveraged loan gradually become a hot investment channel for hoarders under the situation of market downturn or wide fluctuation. The crypto pledge loan solves the problem of cash flow when investors are unwilling or unable to sell currencies. How to realize the leverage effect by mortgage loan and activate the assets that are locked in?
Usually, users will change the stable currency into the mainstream currency in the bull market to catch the rise of the currency price; in the bear market, they will change the mainstream currency into the stable currency to resist the decline of the currency price.
Take the stable currency USDT and the mainstream currency BTC as an example. The general operation is as follows: in a bullish market, users can exchange the other currencies you hold, such as USDT, to BTC through mortgage loan to profit from the rise of the currency price; also, some users tend to mortgage BTC to borrow USDT to continue to buy the mainstream currency that the loan is not for consumption, but for multiple leverage to obtain excess earnings.
In a bearish market, users can exchange the stable currency USDT on hand to BTC through mortgage loan, then sell the BTC, and use the decentralized way to go short for profit; or reduce the loss caused by the market downturn by exchanging the BTC on hand to USDT to achieve resilience.
Crypto Pledge Loan, the Focus of Research on Major Platforms
With the increasing demand of crypto mortgage loan market, there are different types of loan platforms emerging in the market, including: the fast matching platform represented by HyperPay, the pending order matching platform represented by Gate, and the decentralized loan platform represented by MarkerDAO.
"Most platforms provide multiple mortgage currencies, and there’s no comparison between them, but we can tell the advantages and disadvantages from pledge type, loan interest rate, pledge rate and service fee. " When analyzing the characteristics of each platform, the principal of BitLoan pointed out that at present, there are two types of loan: C2C matching and platform (capital pool) lending.
According to the market feedback, the loan type integrating two modes represented by HyperPay is more easily recognized by the market and is more competitive because it enables the borrower’s loan quickly and successfully processed.
Different platforms vary in interest rate, and for borrowers, the lower, the more attractive. In this respect, HyperPay, Gate and renrenbit have more advantages.
The common BTC pledge rate is 60-70%, and Bixin allows users to set pledge rate themselves, ranging from 45% to 75%. However, the higher the pledge rate, the higher the risk of being liquidated. In this regard, HyperPay is actively exploring the way to achieve the highest quality pledge rate through intelligent optimization and continuous improvement of algorithm, building up advantage in risk control.
The Industry Pain Point and the Solution of BitLoan under the Surge of Demand
At present, the value of cryptos has not been widely accepted by traditional financial institutions, so it is difficult for crypto holders to directly obtain the circulation value of cryptos. There’s always been potential risk of investment, and how to effectively avoid the risk depends on whether the industry pain point solution provided is accurate and effective.
The gap between development and popularization of cryptos restricts its scope of use. The products and services that the asset holders can experience are greatly unequal to the actual needs of users. There are few services to experience other than holding investment for a certain time to earn returns. This is a general problem in the industry.
When it comes to the existing crypto pledge loan platform, there are also problems such as high interest rate, slow approval speed, and imperfect risk control system, which seriously restricts the further market expansion of the pledge loan.
"The existing problems is the stage that emerging models have to go through, and major platforms are also actively exploring more advantageous tools. Hyperpay's BitLoan has been in the leading position in the industry," said HyperPay's investors.
It is reported that the cumulative turnover of BitLoan is more than 10 million US dollars, and is still increasing rapidly. Its outstanding advantage lies in its extremely low interest rate and fast loan arrival. Users can mortgage the assets needed for crypto loans, or lend them to obtain profits. The interest rate is 0.03%, and the highest yield from the loan is 18.7%. More than 10000 users are using BitLoan for crypto mortgage loan.
Through the analysis of the platform and the actual operation, the loan interest rate of BitLoan is generally lower than other platforms, and the operation process is simple. At the same time, when the price of the mortgage rises, the repayment amount remains unchanged, and the mortgaged assets can be redeemed. This greatly facilitates the borrower's operation in the crypto investment and reduces the investment cost.
For the lender, in the pledge loan system, the stable currency investment return is much higher than other investment products, and all loans are guaranteed by the locked mortgaged mainstream tokens. In case of market fluctuation or borrower's failure to repay, forced liquidation will be implemented, which not only realizes the lender's investment returns, but also ensures the lender's asset safety.
Whether it is traditional loan or crypto pledge loan, risk control system is the core of users' concern. Hyperpay has set up multiple risk control measures in user authentication, loan application, account security management and other related issues to ensure the security of user assets. Meanwhile, when the borrower prepays or fails to repay in time, HyperPay charges a certain amount of liquidated damages, which helps the lender to maximize the investment returns.
Since 2020, the national risk has become the barometer of investment return, and the crypto which is separated from the endorsement of national sovereignty has become the cosset of the capital market. As an important development direction of crypto financial services, pledge loan becomes a trend with the surge of personal crypto investment demand. The crypto financial service pioneer represented by HyperPay is providing global crypto users and enterprises with financial services such as asset custody, financial enhancement, consumer payment, etc., and more people will share the dividends brought by the development of the general economy in the Internet era with the in-depth development of BitLoan.
