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Welcome to MELD
Welcome to the MELD documentation library.
MELD is the first decentralized and non-custodial liquidity protocol for borrowing fiat (USD and EUR) against your crypto assets and earning yield on deposits.
Introduction
MELD is a decentralized and trustless lending protocol built on the Cardano Blockchain using smart contracts and governed by the MELD token. It provides a fast, safe, and transparent set of tools for anyone to lend and borrow crypto and fiat currencies.
MELD lends fiat currency provided by fiat lenders to borrowers that collateralize their cryptocurrency in a MELD Smart Contract. The lender receives an interest rate from secure investments, whilst the borrower can maintain their crypto positions and see them grow, which has had an average annual rate of 32% (BTC IS 196%) CAGR. We stake the collateral in community-managed liquidity pools for our revenue which is divided 50% to MELD and 50% to MELD token holders.
1. Fiat Liquidity Lending
Fiat liquidity providers lend fiat to the MELD protocol, through the MELDapp, to earn high-interest yields. The yields for lending fiat on MELD are sourced from various places, including interest paid from the borrower, trading fees APY from the liquidity pools of MELDed assets and protocol rewards.
2. Crypto Collateral
For a borrower to gain access to fiat loans, the borrower must deposit cryptocurrency (ADA, BTC, ETH, or BNB) to the MELD loan Smart Contract. Once deposited and locked into the Smart Contract, the borrower will be able to take up to 50% of the value held within the cryptocurrency through a crypto-backed loan or a line of credit.
3. Fiat Borrowing
MELD will offer two fiat borrowing services, crypto-backed loans, and a line of credit. From a collateral perspective, both services function similarly. A borrower will have to deposit 2x the desired fiat in cryptocurrency to utilize either service. Borrowers receive fiat currency via wire transfer directly into their account for crypto-backed loans or gain access to a line of credit utilized by the MELD Debit Card, after depositing their crypto.
4. MELD Vaults (Liquidity Pools)
The liquidity pools run by the MELD protocol are single-sided MELD/Token pools. When a user makes a crypto deposit, the deposit is locked to a smart contract and placed into the respective MELD/Token pool. The benefit of this is that the deposited crypto can be exposed to trading fees APY from external DEX aggregators/routers. The MELD protocol has integrated impermanent loss protection for crypto depositors.
5. The MELD Token
The MELD token provides a few utility functions for the holder. First, MELD issued to pay for some transactions on the protocol. Second, you can stake MELD and earn 4% APY rewards. The MELD staking pool acts as an insurance solution for protocol. The staking pool protects against problems that might arise in the protocol and against impermanent loss in the MELD liquidity pools. The APY for the staking comes from 50% of all protocol fees, such as MELDed assets and trading fees.
6. Loan Repayment
MELD offers crypto-backed loans and a line of credit to crypto depositors. Borrowers of fiat through these instruments pay back the principle & interests monthly until paid off.
7. Crypto Collateral Returned
The crypto collateral is unlocked and withdrawn from the respective liquidity pool to the user’s wallet, and the smart contract is completed upon loan repayment.
8. Fiat Liquidity Returned
At any time, fiat liquidity providers can withdraw their money. If a crypto-backed fiat loan position suffers a liquidation event, then the underlying crypto asset is sold and transferred to fiat to ensure the fiat lender doesn’t suffer any losses.
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Last modified 3mo ago