Lend at Hodl Hodl: True P2P Bitcoin lending is here

[fillippone]

Hodl Hodl, the most famous Bitcoin Based DeX's exchange, has announced a new lending and borrowing service via a Medium Post:

Lend at Hodl Hodl: True P2P Bitcoin lending is here

For the last couple of months, the Hodl Hodl team has been silent, and there was a good reason for this. Since the beginning of 2020, we have been preparing something revolutionary that we believe can add huge value to Bitcoin’s ecosystem. We have been researching — both DeFi and Bitcoin’s lending space — for quite some time, and in spring of 2020, we decided that we can combine the best of these two sectors, and create a unique product — a non-custodial Bitcoin-backed P2P lending platform. So over these last few months, we have been devoted to developing lend.hodlhodl.com — a new way to lend and borrow globally without KYC.

Discover more here:
https://lend.hodlhodl.com/

This is very interesting as it is completely NO KYC^[1] - NO CUSTODIAL - NO FIAT, and, I might add, BITCOIN focused:

• Property one: Non-custodial. Being non-custodial is a core element for every decentralized project out there. In most cases — not only — does this approach ensure a higher level of security, but it also allows your customers to be in control of their own funds. Your keys, your coins.
• Property two: Non-KYC. Property one usually leads to property two. KYC creates unneeded friction and barriers to entry, and storing your private data with a third-party is not very decentralized.
• Property three: Non-fiat. Yes, you read it right. Not having fiat, with all the fiat gatekeepers out there, helps you to create a proper P2P platform. If you look at the most successful DeFi projects you will understand that they are operating without fiat involvement. Instead, fiat is replaced with stablecoins. Such an approach allows you to move the payment part into a real P2P spectrum because stablecoin payments, just like Bitcoin payments, are happening with no middleman involved. Fiat payment institutions can block, reverse, and freeze operations between peers. Removing that type of risk makes your solution more censorship resistant.

This is one of the most interesting De-Fi application, especially for Bitcoin Hodler.

Base use case is Bitcoin Hodler in need of some liquidity.
Instead of selling some precious sats, just borrow some Stablecoin via BTC collateral.
Do your stuff, finance your projects or whatever it might be the case, then give back the borrow and get back your bitcoin.
In case of a "PlanB" scenario this is an effective way to use your bitcoin to access some liquidity without incurring in losses in case of a bull run.

This is the first scenario It came into my mind, but it would be interesting to share some ideas.
Maybe some fiscal arbitrage are possible in case of a possible cash-out



[1] YES, KYC at Hodl Hodl never happened. Hodl Hodl introduces KYC/AML procedures as a sign of solidarity was an April fool

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[Ayiranorea]

Non custodial means the user himself is responsible for the funds. There is no KYC, how this gonna be effective on lending. I'm not that good with the lending process. Now or then the user is supposed to provide collateral to get fund. User can't hide his identity, is there anything specifically mentioned as the collateral for lending.

[Coyster]

Now or then the user is supposed to provide collateral to get fund.

After reading the article, it's clear that the collateral is going to be paid/provided in btc and not through any other means. See excerpt:

Truly P2P. Only P2P collateral and payments. Your collateral will be Bitcoin, and all payments will be made with stablecoins

User can't hide his identity, is there anything specifically mentioned as the collateral for lending.

As has been said already, the collateral is in btc and as for users identity, it looks like it's going to be protected/remain private, see excerpt:

Zero-KYC. You only share your crypto addresses with your counterparty. No banking details, no locations, nothing.

With the info mentioned in the excerpt above, none of it actually reveals a lender or borrowers identity to the other party
That being said, it looks a good development for Bitcoin and it should be convenient for users who will try it out. I believe people will use this service, and I like it (plus it's good for adoption) when Bitcoin provides services that only fiat and few other assets have provided for quite a long time now.

[Ucy]

I wonder if the site is decentralized.   I would prefer to do this on decentralized platforms so we don't experience as situation where a site gain too many users and eventually require the unsafe/risky kyc model due to pressure from typical regulators. I like the non-custodial approach though.

[dothebeats]

It truly envisions a true P2P platform, although I still have doubts on its viability since it's not common for people in this day and age to ask for loans and put btc as collateral, given that most people back then ask btc and give other altcoins as collateral in order to just dispose their coins that they cannot sell in the market. It's good that the platform is already out, though I don't think it will be utilized fully considering that most are just eyeing on DeFi loans anyway and are getting what they truly wanted, plus the fact that it has been around relatively longer and performs relatively well given the minimum collateral amount that safeguards lenders from wild rides on fluctuations should the borrower decides to default.

[BIT-BENDER]

Many Bitcoin -hodler- has avoided or left un-used, services like this on accounts of Privacy,security,anonymous and many other, the developers of this has taking that extra yard with those features it has, this is unadulterated decentralization.
Although it would have been exciting if the non-fait property be left to the decision of user, like it should be you can choose fiat or no non-fiat, except that it's an exciting service.

[Charles-Tim]

In my opinion, I like this concept, if someone wants to borrow funds (probably, coins other than bitcoin) a contract is created in which escrow will be generated, the borrower will deposit bitcoin as a collateral in the eswrow directly from his wallet, after that, the loan will be transferred by the person that wants to lend the person that wants to borrow and in accordance to the contract. So, if the borrower repay the fund, the bitcoin in escrow will be released and the borrower will take back his/bitcoin.
 
But, one question comes to my mind. So far no kyc is required, and not custodial, this is a good approach, but that means only bitcoin in escrow will the borrower be able to borrow in other currecy? Or will the borrower be able to borrow more than the bitcoin in escrow? And also, I will like it if we can discuss the monthly percentage gain of the lender. So, to know if the service will be good.

Borrowing stable coin is the best for this approach, like if some noticed there will be gain or increase in price of bitcoin, borrowing stable coin at such point is best.

Although it would have been exciting if the non-fait property be left to the decision of user, like it should be you can choose fiat or no non-fiat, except that it's an exciting service.

Lending and borrowing fiat will not be appropriate because it will compromise privacy. Although, it would have been a lot easier if fiat can be borrowed.

[hugeblack]

It is good to see a platform trying to develop something, but I think that the field of lending will be revolutionary if it is done through a protocol like Khaled so that it can be done through smart contracts and other methods.
In my opinion, the problem lies in the fluctuation and instability of the exchange rate, which means that any solutions are a waste of time.

[exstasie]

This is one of the most interesting De-Fi application, especially for Bitcoin Hodler.

Base use case is Bitcoin Hodler in need of some liquidity.
Instead of selling some precious sats, just borrow some Stablecoin via BTC collateral.
Do your stuff, finance your projects or whatever it might be the case, then give back the borrow and get back your bitcoin.
In case of a "PlanB" scenario this is an effective way to use your bitcoin to access some liquidity without incurring in losses in case of a bull run.

Yep, I think this is the original use case for any collateral based DeFi lending. You can maintain your crypto exposure and not trigger short term tax liability by borrowing instead of liquidating.

[1] YES, KYC at Hodl Hodl never happened. Hodl Hodl introduces KYC/AML procedures as a sign of solidarity was an April fool

Bad joke.....

[notblox1]

Thanks!
I think that I am very well inform about crypto news, but somehow I missed this news until now.

This is very interesting as it is completely NO KYC^[1] - NO CUSTODIAL - NO FIAT, and, I might add, BITCOIN focused:

Lending bitcoin without kyc sounds great and all this looks very good on paper, but is there any negative side on lending Bitcoin like this and do I have to move them on ethereum blockchain or not?
I checked on their website and all I can see is four stable coins USDT, USDC, PAX and DAI.
Sure looks interesting,and I see they have some big partners so I will create account to test how everything works.


https://lend.hodlhodl.com/

[ololajulo]

asides the collateral what is the interest rate of the lend? If there are provisions similar to Defi, state them and other factor why it could be preferable to ethereum. Most defi project might have to provide enough information to prove that stake fund will be safe and there wont be exit scam whatsoever from the team. The other challenge is the transaction fee and speed of transaction

[Nellayar]

After looking the site, I notice that they only support the stablecoins when it comes to loan. Actually, it is four stablecoins and the collateral is in BTC. Well, its good if there are still cryptocurrencies that the site will accept, such as ethereum and BCH. The problem with non-KYC loan is the security of the lender to be paid. However, because there is a collateral, it would be an assurance for the lenders to render a loan to the loaner. The interests from day 1 to 1 month is 2%, seem like it is enough and not hard to be paid.

BTC as collateral might be risky because of its volatility. There are people who probably loan during the heights of BTC so that they can paid it when bitcoin suddenly crash. Anyway, it is part of the lending in cryptocurrency.

asides the collateral what is the interest rate of the lend?

It depends to the period of settlement.

From 1 month to 3 months, 1% interest rate
12 months, 5% interest rates
6 months, 2.5% interest rates.

You can check it to the website listed by OP.



Anyway, loan in exchanges is not new to me since there are already exchanges that I used the marginals. TKP is also a p2p exchange which I used before that had cryptocurrencies collateral. Aside from them, I hope this exchange would go more far development. Thank you for sharing this information OP.

[hatshepsut93]

Base use case is Bitcoin Hodler in need of some liquidity.
Instead of selling some precious sats, just borrow some Stablecoin via BTC collateral.
Do your stuff, finance your projects or whatever it might be the case, then give back the borrow and get back your bitcoin.
In case of a "PlanB" scenario this is an effective way to use your bitcoin to access some liquidity without incurring in losses in case of a bull run.

As someone with having Bitcoin as the majority of my assets, I would never do this. If the market will be bullish, I will be happy that the rest of my coins are worth even more now. If the market turned bearish and I had used my Bitcoin as a collateral, not only all my coins are worth less, I would also have to buyback my coins at a higher price. The negatives outweigh the potential benefits, at least to me. I was spending my coins when the price was $650 and I don't really regret it, because I'm happy that Bitcoin reached the price it is now and I still have enough coins.

This lending scheme will mostly be used by traders to short/long Bitcoin is a decentralized way.

[OcTradism]

They state about their policies against KYC/ AML

Why should I use Hodl Hodl?
Here are a few of our advantages:

• Safety – we don't hold users' funds as other trading platforms do.
• No KYC/AML – because, again, we don't hold users' funds.
• Speed – because we don't hold user funds – all trades happen directly between users wallets.
• Before you trade real Bitcoin, feel free to learn using our TESTNET.
• Truly global trades!

There is limits for contract amount and maximum of trade amount for different levels of user.

What kind of limits are there on Hodl Hodl?
We give each user a specific limit level, and depending on this level, specific limitations are applied.

Each user is limited by:

the total number of contracts he can have simultaneously;
the number of simultaneous enabled offers a user can have (we do not limit the total number of offers that you can have - only the enabled ones);
the maximum amount of bitcoins that can be traded in a single contract;
Also, there are conditions for how a user can proceed to the next limit level (user has to fulfill all of them):

the user must meet a required minimum number of successfully ended trades;
a certain percentage of these contracts must be performed with different traders;
the user must have a specific volume in bitcoins;
In table below, we provide detailed information about the limits and conditions which are applied to each specific limit level.

Click on the link to see the table, please.

I see they have different fees, smaller fee for verified users (0.5%), the default fee is 0.6%. Hodl Hodl do not require verification for all users but they have verification process for people who have needs. Fortunately, there is no rule on a cap of lifetime trade volume to require KYC. People only need to do KYC for their own need, if they don't have needs, they are not required to verify their accounts.

How do I complete the verification process?

To complete personal ID verification or corporate verification, please send us an e-mail at support@hodlhodl.com requesting it. By completing corporate verification, you will be given an opportunity to register up to five accounts that will be granted “Verified” status. Plus, we may consider additional benefits for the companies that have passed corporate verification.

Do not forget, that verification is NOT mandatory and you can trade on Hodl Hodl trading platform without completing it.

https://hodlhodl.com/pages/faq

[philipma1957]

If you are USA based and send an amount of btc out of your wallet to an escrow it is a reportable tax event for capital gains. You no longer own that coin as it left your wallet and went into an escrows wallet.

Be extremely careful of tax consequences if you are Usa 🇺🇸 based.

Note I am not a legal expert on tax law. 

But be careful you don’t create what you are looking to avoid.

ie  a capital gain. When you move coin from your btc wallet to an escrow wallet.

[tranthidung]

Note I am not a legal expert on tax law. 

I don't mean you need it but if anyone needs help with tax and their cryptocurrency investments, they can check the thread from Ratimov. Feel free to drop your questions on Ratimov's thread, he will give you his answers as soon as possible. Ratimov is knowledgeable and very active.

[Tutorial] Crypto taxes for beginners

[Lorence.xD]

asides the collateral what is the interest rate of the lend? If there are provisions similar to Defi, state them and other factor why it could be preferable to ethereum. Most defi project might have to provide enough information to prove that stake fund will be safe and there wont be exit scam whatsoever from the team. The other challenge is the transaction fee and speed of transaction

That is what I am thinking of, there should be interest to keep this service afloat. The problem with that is they need to find the sweet spot of interest rate that is not painstaking to the lenders but still profitable for the lenders. One other problem is the KYC-lessness of this services, there will be people who will make a run for their money no matter how much is the collateral, how can they solve that issue.

[Upgrade00]

That is what I am thinking of, there should be interest to keep this service afloat. The problem with that is they need to find the sweet spot of interest rate that is not painstaking to the lenders but still profitable for the lenders.

This is a peer to peer network which connects lenders to borrowers through their platform, so any interest on loans does not go into keeping the service afloat as it goes to the lender and not the website (The website charges -1% of the loan amount to be paid by the borrower, according to their FAQ, and claims to have no hidden charges.). Also, since it is P2P, both parties set the rates which would apply to their contract and which is suitable for everyone

What are the interest rates?
Interest rates are set by you or your counterparty, and are set for the whole loan term. For example:

...

You set the terms!

Overall I am quite impressed with the service and they seem to have covered lots of possible loose ends, this service should drive more users to decentralized platforms such as this which would help improve their liquidity.

[Bttzed03]

I wonder if the site is decentralized.

Title already says "P2P" not "Decentralized". There's a big difference between the two. You are required to create an account there using an email which also means they keep your data on centralized server/s.

After looking the site, I notice that they only support the stablecoins when it comes to loan. Actually, it is four stablecoins and the collateral is in BTC. Well, its good if there are still cryptocurrencies that the site will accept, such as ethereum and BCH.

It'll only complicate things if users can borrow cryptos other than stable coins due to volatility. If you talking about adding ETH and BCH as option for collateral, I think it's not a bad idea.


I looked at the borrower's offer and they don't look too encouraging for me as a lender but I like that they are required to add more collateral if BTC drops  in fiat value.

[akram143]

Agree that this is really unique idea and also goes with the current trend of crypto market but is it really worth to borrow money here? We need to give bitcoin to get something in a stable coin and also we need to pay the interest.Why we shouldn't sell our bitcoin on p2p and then buy later when we want so we can save the money which are going to be paid for their interest rate.