Analysis of Salt Lending ICO – Blockchain-Backed Loans - Crush Crypto

Analysis of Salt Lending ICO – Blockchain-Backed Loans

Summary

  • Project Name: Salt
  • Token ticker: SALT
  • Websitehttps://www.saltlending.com/
  • Whitepaper: https://crushcrypto.com/wp-content/uploads/2017/08/SALT-abstract.pdf
  • Hard cap: $48.5 million (ICO contributors own 45% of total token supply if all SALT are sold in ICO)
  • Soft Cap: US$35 million
  • Conversion rate: Retail price of a SALT token is from $10
  • Maximum market cap at ICO: US$108 million
  • Bonus structure: Different tier in pricing from $3 to $7.5 per SALT depending on contribution time
  • ERC20 token: Yes
  • Timeline: August 15 (please refer to Salt’s website for most up-to-date information)
  • Token distribution date: 15 days after the end of security audit which will take place after membership sale

Project Overview

What does the company/project do?

SALT is a membership-based lending and borrowing network that allows users to leverage their blockchain assets to secure cash loans. On the SALT platform, users can obtain loans using their cryptocurrency holdings as collateral.

With SALT, users can leverage the value of certain digital assets, thereby giving them access to cash, offsetting tax events, avoiding exchange fees and maintaining their long position in the asset they hold.

Users need to obtain SALT tokens in order to participate on the platform and obtain loans. The more SALT tokens users spend each year, the larger amount of borrowings they can obtain.

With the SALT platform, users can obtain liquidity from their cryptocurrency holdings without selling them, just like other traditional asset classes such as stocks, bonds, real estate, and commodities.

SALT loans are exclusively collateral-based, which means that the borrower’s credit history is inconsequential. Any user’s collateral has the same value to lenders as anyone else on the platform, regardless of each user’s credit score.

The picture below shows the process of obtaining a loan on the SALT platform:

SALT Lending procedure

How advanced is the project?

The project was conceived in 2016. In early 2017, SALT completed a seed capital funding round, raising over $1 million. All executive members of the team and board members have contributed personal funds to the development of the software and the company.

In March 2017, SALT created the first Blockchain-Backed Loan Agreement.

SALT expects to launch the Blockchain-Backed Lending Platform in 2017 Q4, and the Development Platform API & Dev Tools in 2018 Q1.

What are the tokens used for and how can token holders make money?

SALT tokens represent levels of access to the SALT Lending Platform. It can also be redeemed for products and services and other rewards offered through the platform.

The picture below shows the different membership tiers:

SALT Lending Membership Tiers

A total fixed supply of 120,000,000 Membership units exist.

Demand for lending and borrowing on the SALT Platform will drive the demand for Membership. The more usage the SALT Platform has, the more valuable SALT tokens should be.

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Team

SALT has a team of 25, 5 of whom are founding partners. All the team members have relevant experience in their respective role.

Shawn Owen, CEO – A serial entrepreneur with experience in management and ownership of enterprise operations. Shawn became involved with blockchain technology through his advocacy of bitcoin in early 2011.

Phil Cowan, CTO –17 years of experience in application architecture development and design solutions. Prior to acting as CEO of Ideas By Nature, he spent seven years as a web application developer and graphic designer at LSDi Consulting, Wombat Interactive and ASAP, Inc.

Ben Yablon, Chief Strategy Officer – 15 years of legal expertise centered on emerging financial technology platforms and regulatory compliance as a partner at Atlas Law Group.

Erik Voorhees, Board Director – CEO & Founder of ShapeShift, and previously founded Satoshi Dice and Coinapult.


Opportunities

  • Borrowing using cryptocurrency as collateral is a large and growing need as cryptocurrency emerges as a legitimate investment asset class.
  • Utilizing the blockchain, SALT is able to automate many of the processes in the application and monitoring of loans, thus lowering the cost for borrowers.
  • Network effect is present. The bigger SALT gets, the more lenders and borrowers of different coins/tokens, which provides the platform more liquidity.
  • The company has a strong team in place, including the CEO of Shapeshift on the board.
  • SALT has already secured investments from venture capital firms, meaning that the project has already passed due diligence of those institutional investors.

Concerns

  • The two-tier fees of fiat and SALT can be confusing to some users, making the platform not as user friendly.
  • If SALT becomes successful and many people use it, it may cause cryptocurrency prices to be more volatile because there will be more margin calls when price decline. This would create more force selling and prices to decline further, creating a downward cycle.
  • Margin call monitoring may be difficult to implement for cryptocurrency assets because there are different exchanges trading the same asset. “Fat finger” may be a problem that can trigger unwarranted margin calls.

Conclusion

I am neutral about the short-term potential but like its long-term potential. As a project, I really believe SALT has a huge potential for the following reasons.

This project is going to help cryptocurrency as an investment asset class. If SALT is successful, taking a loan from cryptocurrency holdings would be something that is easily done, similar to other asset classes such as real estate and stocks. More people would invest in cryptocurrencies if they can borrow against it.

The SALT platform is compelling not only for borrowers, but for lenders as well. This is going to provide another venue of income and shield lenders from the volatility of crypto. Using the SALT platform as a lender also offers the potential to acquire cryptocurrencies when prices are low / during market downturn or panic, which are actually some of the best times to increase exposure in crypto.

With the volatility of cryptocurrencies, lenders would need to be properly compensated to take on the risks of asset prices falling under the loan value. I am not surprised if lenders on SALT receive annual interest rate of over 20%.

Our thoughts of the tokens for short term and long term are as follows:

For short-term holding

Neutral because there are other pre-ICO investors who purchased SALT tokens for as low as $0.25. Some of those investors may want to cash out and diversify their investments, and they may be willing to sell their tokens for much less than $10. This may create a downward pressure of SALT price initially.

For long-term holding

Good because I believe blockchain-backed loans have a huge potential. With the strong team in place, SALT has a good chance to succeed because there is a genuine need for its services.


For more information about the ICO, please visit the following links:

Website: https://www.saltlending.com/

Whitepaper: https://crushcrypto.com/wp-content/uploads/2017/08/SALT-abstract.pdf

Membership site: https://membership.saltlending.com​

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