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While the project was launched in May 2021, the launch of the MELD DeFi protocol will happen sometime in Q4 2021.
MELD is building the DeFi banking stack of the Cardano blockchain. Once completed, it will help unlock the value of crypto assets in fiat while helping crypto-investors keep a long position and avoid a taxable event.
According to the project’s whitepaper, the project will provide crypto-backed loans in fiat and crypto denominations at market-competitive interest rates.
Reacting to this innovative DeFi banking stack, known crypto investor and fundamental analyst, Ben Knaus, said: “The use case is immense, especially for those like myself whose net worths are heavily weighted in digital assets, and continue to convert fiat into crypto.”
What Is MELD?
MELD is a decentralized and trustless network built on the Cardano Blockchain using smart contracts and governed by the MELD Foundation (Switzerland). It is an open-source, non-custodial liquidity protocol for borrowing fiat (USD and EUR) against crypto collateral and earning yield on deposits. This provides a fast, safe, and transparent set of tools for all participants to lend and borrow in the DeFi ecosystem.
How It Works
While the Defi project has several use cases, we consider two below.
The Borrowing contract provides an alternative for crypto investors looking to use fiat in the short run while keeping their crypto assets untouched in the long term. This way, such investors can avoid the decline in buying power often associated with fiat currencies and the tax event that converting crypto assets to fiat triggers.
Rather, using the MELDapp, these investors can collateralize their crypto assets to get loans. Once the KYC is completed, the loan is transferred to a pre-selected bank. The smart contract automatically ends once the loan is repaid. This also triggers the release of the crypto assets to the investor.
Contrarily, the Lending Contract allows users to deposit fiat into the MELD foundation’s fiat liquidity pool through a bank transfer. Once this is confirmed, the investment will be tracked. Lenders will be able to receive treasury MELD as a reward. Also, the lender will also get back an equal amount of fiat provided it is not requested too early. If it is, a fee may be charged.
Why Is MELD Better?
In a world where cryptocurrencies are consistently amassing value, and their adoption is increasing, MELD boasts of several advantages over mainstream bank loans or other forms of credit. Some of them are listed below:
- Unlocking the value in your cryptocurrency without liquidating your position.
- High yield for fiat liquidity providers.
- No tax event is triggered in any part of the protocol.
- Easy and fast fiat lending and borrowing.
- Transparent non custodial process, contracts, terms, and events
- Wrapped asset creation and management tools provided to the whole DeFi ecosystem.
In his comment, Ben Knaus believes that being able to borrow during a bear market is particularly striking for him. He went ahead to also say that “on top of that I’d much rather borrow or add liquidity to a decentralized protocol versus having a central point of failure.”
Current State of the Project
While the project was launched in May 2021, the launch of the MELD DeFi protocol will happen sometime in Q4 2021. Yet, Since May significant progress has been made according to the project pipeline. First, a private sale was conducted to key contributors and investors, substantial commits have been made, and now can be viewed on the project’s GitHub.
Currently, the project is in the Initial Stake Pool offering stage. To date over 350 Million ADA ( $730,000,000+ Million USD value) have been staked to MELD stake pools, by over 16,000 delegators. Here, users can delegate any amount of ADA to the MELD stake pools for any period they choose, and earn MELD tokens as awards. All contributors will be rewarded with 0.065 MELD tokens per ADA, per epoch staked December 8th via an airdrop.