Understanding Money Token and How It Can Solve the Crypto Problem
Money Token is the best example of blockchain technology, and it provides an excellent boost for crypto market liquidity for businesses and market players. Learn more about it here.
From the time crypto was introduced there has been a lot of problems coming up. One of the prominent issues is it prevents cryptocurrency holders from increasing their asset value. Account holders who purchase low, need to hold on to their investments to take advantage of selling high.
What is MoneyToken?
Good thing there’s Money Token. Their platform will allow you to borrow liquid funds depending on the present value of your cryptocurrency asset holdings. You get a loan, collateralized with more volatile assets like Ethereum or Bitcoin – and you will get an agreed loan amount in return in the form of stable currency.
After paying the loan completely, you will get your collateral back even if it has increased in value several times. Thru this, you can get liquid funds for emergency needs and at the same time save your crypto position.
With the help of MoneyToken, you don’t have to sell your BTC if you need money or stable currency.
Advantages of Money Token Lending Model
Fluctuating crypto-assets is used in MoneyToken’s lending model as collateral for a loan provided is in fiat currency or stable coin. Here are the advantages of this lending model against the traditional pawnbrokers or banking method:
- Faster loan confirmation within minutes or seconds.
- It does not require verification or credit scoring of assets.
- The customers have the free will to regulate the loan conditions as long as it complies with the platform terms.
- You can decide to deposit the collateral in different cryptocurrency assets to stabilize the fluctuation of the collateral and prevent the increase in interest rates.
- Transparency on the retention and transfer of the security deposit.
- Clarity on the fluctuation and evaluation of its value in the future for both parties.
How Money Token Works?
As mentioned above, you don’t have to sell your bitcoin with MoneyToken if you need liquid funds. Collateral supports the loan amount. The client can set a repayment-to-collateral ratio of 30% to 70%. Based on the retrospective analysis in Bitcoin variations, 50% ratio is set as the optimal. For instance, an owner of a mining farm needs urgent funds to purchase some equipment amounting to $500,000. He decided to sell his Bitcoins and get the money in fiat currency, or buys the equipment using Bitcoin, in any case, he lost his investment position.
Stop Loss and the Borrower Choices
If the repayment-to-collateral ratio grows higher than 95%, the platform automatically cashes out a certain amount of the collateral to pay the loan and returns the outstanding collateral funds to a user. The automated Stop Loss was activated to the borrower. Because of this, a reduction in collateral value Stop Loss may occur. Before the Stop Loss, the debtor will have the following choices:
- Boost the amount of collateral with an additional crypto-currency.
- Pay a certain amount of loan ahead of schedule.
- The rest of the deposit will be returned to the user’s account.
- Pay the loan, by selling part of the surety at the present market price.
Behind this platform is Amanda. It is an Artificial Intelligence Assistant who will offer automated loan operations on the system. Aside from the assistant function, Amanda serves as a real AI, analyzes the client as their first step on the platform. She offers the customer extra financial services which interest them. The AI also tracks collateral, repay the loan, like bank manager would do in the real world but based on data.
A deep AI algorithm controls Amanda, and her objective is to offer human-like services for the system users. This will change how people think about the financial market. No hidden commissions, shady managers, and problems with transaction support.
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