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Is Crypto Lending Dead? SALT Lending Proves Otherwise
The ongoing bear market has had a destabilizing effect on the crypto lending industry. In the last few months, we’ve seen a spate of high-profile closures and layoffs among companies in the space.
After years of accumulated frustrations with the paltry yields earned from traditional banks, savers breathed a sigh of relief when digital currencies appeared on the scene.
For the first time, it seemed, they could earn a decent return on their savings without having to take on undue risk.
The rise of crypto lending platforms like Voyager, BlockFi, and Celsius Network promised to further this development, by allowing savers to earn even higher interest rates on their digital assets.
However, the recent market downturn has put immense pressure on these companies, with some forced to make drastic cuts to stay afloat.
There has been one bright spot in the lending market, however: SALT Lending.
Trouble in the Crypto Lending Space
To say the last few months has been unkind to the crypto lending market would be a vast understatement.
Voyager, for instance, is fresh out of an auction that saw FTX US emerge as the winner of the bid after Voyager Digital declared bankruptcy.
Celsius Network, another major player in the crypto lending space, has seen its embattled CEO Alex Mashinsky resign amid the company’s bankruptcy proceedings and accusations of fraud and mismanagement.
BlockFi has performed better than some of its competitors but also had to make a round of layoffs, with the company’s COO telling The Block that the cuts were due to the ‘current state of the crypto markets.’ At the tail end of 2020, BlockFi had grown its staff from 150 to over 850.
In the face of all these challenges, it’s natural to wonder if the crypto lending industry is on its deathbed.
However, one company that seems to be bucking the trend is SALT Lending.
How SALT Lending Stands Out
The Denver-based firm recently entered into a LOI (Letter of Intent) to be acquired by Bnk To The Future, a prominent micro venture capital firm offering investors access to early-stage crypto companies for $1000.
According to a spokesman from Bnk To The Future, the firm plans to help distressed crypto lending platforms and their customers by providing them with access to new markets and opportunities.
The acquisition of SALT Lending by Bnk To The Future is still contingent on regulatory approval and the signing of definitive agreements. But if the deal goes through, it will give Salt Lending the resources it needs to weather the current market storm and emerge even stronger on the other side.
Robert Ordell, who is SALT Lending’s Head of Marketing & Growth, spoke concerning the acquisition describing the move as a “union of first movers in the crypto space.”
The move also signals confidence in the long-term prospects of the crypto lending industry. So, despite the challenges it currently faces, don’t count crypto lending out just yet.
“We want to offer an option for distressed lending companies that may not be able to come out of the bankruptcy due to regulatory issues,” Opined Simon Dixon (Bnk To The Future’s CEO) in an interview.
And SALT Lending certainly seems to be doing something right. The company is one of the few crypto lending platforms that is still in operation, and it seems to be thriving despite the challenges faced by the industry.
The Ultimate Survivor?
Founded in 2016, SALT Lending is the oldest crypto lending platform predating the hyped DeFi summer of 2020 that saw a proliferation of similar platforms.
The company allows users to put up their digital assets as collateral and borrow cash or stablecoins against them starting with a loan-to-value ratio of 20% to 70%.
The company initially started by lending to users with Bitcoin and Ethereum as collateral but has since grown to support different types of crypto collateral, including Bitcoin, Ethereum, Litecoin, Pax Gold, and Bitcoin Cash to mention a few.
Currently, SALT Lending also offers advanced features such as a unique stabilization method that allows borrowers to maintain a constant LTV (loan to value) ratio even in a bear market, which is especially important right now.
It’s also worth noting that SALT Lending has never offered a general yield-bearing accounts like Celsius and Voyager, which ended up carrying a significant amount of risk to those companies. Instead SALT requires accredited investor status to participate in their yield-earning products.
The Return of Lending?
The jury is still out on whether centralized crypto lending can survive the current market downturn. However, Salt Lending is certainly doing its part to ensure that the industry doesn’t go down without a fight.
According to research, venture capital funding into the digital assets space continues to rise as crypto projects raise $31.3 billion between January and July compared to 2021’s $30.5 billion.
And with the acquisition of Salt Lending by Bnk To The Future, it seems like there is still faith in the long-term prospects of the industry.
