Users with an account at Hodl Hodl already have access to the new product. Hodl Hodl limits concurrent loan agreements to 10 per user.
The peer-to-peer (P2P) bitcoin (BTC) exchange Hodl Hodl launched a new platform that allows users to request and offer loans with collateral in bitcoin, inspired by “the main advantages of DeFi (decentralized finance) projects: no custody, no fiat money nor personal data with KYC (Know Your Customer or Meet your client).
Through a press release, Hodl Hodl reported that the service is available to its users from this Thursday, October 22. This platform, called Lend at Hodl Hodl, seeks to “combine the best features in both DeFi and Bitcoin loan spaces,” the text states.
With the new tool, Hodl Hodl users will gain access loans in stablecoins tether (USDT), USD Coin (USDC), DAI, and Paxos (PAX) by placing BTC as collateral. The motto is not to sell the bitcoins but to keep them in a contract between the parties and get them back once they pay the loan.
According to Hodl Hodl, the use of stablecoins instead of fiat money gives anyone in the world the chance to start businesses. “There are no borders. By eradicating fiat money, we also erase borders. Now everyone can lend money to everyone, and everyone can borrow from everyone, “they say in their statement.
Being a peer-to-peer trading platform, it is up to each merchant to define the parameters of each offer, either to lend or to request a loan. That means that each person defines the correlation between the loan and its collateral, in addition to the interest on the loan and the period of validity as well as the settlement. That period can range from 1 day to 12 months in total.
As with its exchange platform, Hodl Hodl implements the use of multi-signature contracts to protect the parties without withholding anyone’s funds. Once both parties confirm the loan payment, the funds get free to the user who placed them as collateral.
Max Kei, CEO of Hodl Hodl, assured that the multi-signature deposit mechanism implemented in his platform is “an ace up our sleeve that we believe will bring much more value in the future.”
Likewise, he considered that the launch of this loan tool represents “a great step towards decentralized finance,” cites the company’s press release.
Fees and maximum of loans with collateral in Bitcoin
Beyond the negotiations being direct with other people, Hodl Hodl establishes a limit to the number of loans that each user can open: a maximum of 10 at a time. This limit applies only to loans taken, while each user can lend as many times as they want.
Users who have an account at Hodl Hodl now have access to the loan service without the need to create a new additional account.
For each contract, the platform charges a commission of 1% of the total loan amount. This commission is added to the collateral deposited in the guarantee and is deducted by Hodl Hodl at the time of the release of funds after the loan is paid off.
Launched in 2018, Hodl Hodl focused since the very beginning on offering a platform that, in addition to not guarding the funds of its users, respects their privacy and anonymity. The latter reinforce happened at the end of March this year when they eliminated the option to verify accounts on the platform with KYC.
On the other hand, last September, the exchange platform would allow the transfer of funds from BTC to Dollar on Chain (DoC), a currency anchored to the dollar that runs on the protocol for smart contracts in Bitcoin, RSK.
By: Jenson Nuñez.