FAQ
If you have a question that isn't listed below, please send an email to: info@meld.com and we will answer and add it to the FAQ below!
What is MELD?
How does MELD work?
Can you mention some of the interesting features of MELD?
What are the future plans for MELD?
How about security in MELD? Do all users have to KYC before they can access the features? How about attacks or hacks from outside? Does MELD also allow bug hunters?
What are the ways I can make a profit with the MELDapp? How can I "earn all the time"?
What is different in MELD?
What type of user data is required to register on MELD?
How much collateral would I need to put down say, for example, I want to borrow a thousand USD worth of BUSD?
People get some crypto as collateral borrow fiat, buy crypto with that fiat, can borrow more crypto in an infinite loop? How you stop this, KYC?
So there is no guarantee that my loan will be secure during the loan period, the fiat provider can demand payback at any time, at which point my crypto will be sold?
What is the APY for the pools for depositing ADA/MELD? How much collateral on the zero-interest loans?
What are the benefits of using MELD for crypto-backed loans?
What is the process for obtaining a loan with MELD?
How does MELD protect lenders from default loans?
What types of assets are accepted as collateral?
What are the minimum and maximum loan amounts?
How long is the loan period?
What is the interest rate for loans?
What was ISPO? What did participants receive from joining the ISPO?
What happened if staking started later, such as in August, resulting in less than 32 epochs of staking? Was the reward still approximately 2 MELD or was it 0.065 per ADA?
What happened if staking started later, such as in August, resulting in less than 32 epochs of staking? Was the reward still approximately 2 MELD or was it 0.065 per ADA?
Why were the coins only distributed on December 8th and not when smart contracts went live?
What was the difference between MELD1, MELD2, and MELD3?
GENERAL
What is MELD?
MELD is an innovative decentralized finance (DeFi) protocol that built for Web3 finance. Unlike traditional finance, MELD is non-custodial, meaning that users have full control of their assets without the need for intermediaries. MELD offers a variety of services such as cross-chain lending, borrowing, and staking, all of which can be easily accessed on the MELD blockchain.
How does Meld work?
MELD supports the six leading blockchains, namely Bitcoin, Ethereum, Cardano, Avalanche, Polygon and Binance Smart Chain. This means that users can seamlessly transfer their assets from one blockchain to another without worrying about compatibility issues because bridging is integrated into the MELDapp. Moreover, MELD also offers integrated fiat banking services through MELD Finance, which allows users to exchange between fiat and crypto as well as deposit and withdraw and spend funds using their local currency. Overall, MELD is a comprehensive DeFi protocol that empowers users to take control of their finances and access a wide range of services through a single platform.
Can you mention some of the interesting features of MELD?
MELD offers a comprehensive set of Web3 tools to securely put your fiat and cryptocurrency to work for you. As a cross-chain DeFi protocol, Meld lets you unlock the value of our assets through lending, borrowing, trading, and generating various types of yield. The MELD ecosystem includes a layer 1 blockchain designed for high capital efficiency, a Neobank, a cross-chain non-custodial wallet, a lending and borrowing protocol and the $MELD tokens is natively cross-chain trading on 7 blockchains.
What are the future plans for MELD?
Have a look at the roadmap on www.meld.com.
How about security in MELD? Do all users have to KYC before they can access the features? How about attacks or hacks from outside? Does MELD also allow bug hunters?
Security is definitely our number one factor. We have qualified in-house security engineers, been working with world-class security researchers and going to hire the best auditors in the scene. We're doing very careful security design, operations, and implementation to secure all end users, devices, stake pool servers, cloud infrastructure, smart contracts and economic models. We're constantly attacking ourselves to find vulnerabilities from attackers' perspectives. Also subscribed to all the latest news, seminars, courses and other resources from top security researchers to always stay up-to-date. Very serious stuff. Users don't have to do KYC to use crypto-only functionalities of the MELDApp. Only required for fiat services.
Certik Audit Score (EVM): https://skynet.certik.com/projects/meld
TWEAG Audit (Cardano): https://meld-labs.github.io/technical/assets/tweag-audit-202112.pdf
What are the ways I can make a profit with the MELDapp? How can I "earn all the time"?
There are many different ways to make a profit on MELD. As a lender, you can provide fiat or crypto to the lending pool to earn interest and yield. As a borrower, you yield farm on your deposited crypto collateral to pay back the interest. So in a bullish market (why you stay long on the crypto), you're going to have a negative interest on your loan! You can also deposit assets to a stability pool to earn a net positive on a liquidation event. All these participation scenarios are further incentivized with MELD tokens from the treasury pool. That you can stake to earn even more MELD reward as a further revenue stream. Protocol fees mainly come from trading fees on our deep liquidity pools by traders, and MELDing fees on our MELDed asset service, in exchange for exposure to a diverse asset class's deep liquidity. So now it's not too good to be true, it's a well-designed protocol that benefits all users.
What is different in MELD?
MELD is different in that we operate in fiat in a very tax-efficient way. So once your crypto collateral is deposited and locked on-chain, the fiat loan will be automatically wired to your bank account. This doesn't risk a capital gain tax event like when you cashing out on borrowed crypto. And the fiat loan interest is tax-deductible in many jurisdictions as well!
What type of user data is required to register on MELD?
For the crypto-side, there is no data required and any information you provide is optional.
For the fiat-side, users must undergo a Know-Your-Customer process.
BORROWING & LENDING
How much collateral would I need to put down say, for example, I want to borrow a thousand USD worth of BUSD?
As to the nature of the loans, we will have several different types of loans for different types of borrowers. As a basis for crypto to fiat loans, you will need to have twice the amount of crypto as you will borrow in fiat. If you collateralize $100k in BTC, then you can borrow $50k in USD. But we also have loan types that let you borrow 90% of the collateral value and take out a loan in the MELD stable coin mUSD. Our focus is to provide a low-risk model because we want to minimize possible liquidations of customer positions.
People get some crypto as collateral borrow fiat, buy crypto with that fiat, can borrow more crypto in an infinite loop?
How you stop this, KYC? On systems like ours, users can borrow less than their collateral value, so if they keep repeating the process, they keep borrowing less and less until their loan is not meaningful anymore. And many debt positions with interest aren't fun, way less efficient than one single position. Buying crypto with fiat and most other operations have transaction fees as well.
So there is no guarantee that my loan will be secure during the loan period, the fiat provider can demand payback at any time, at which point my crypto will be sold?
No, this is not a P2P lending model. Fiat liquidity providers (lenders) deposit their fiat into a lending pool (the non-profit MELD Foundation with a transparent ledger for third-party auditing) for borrowers to borrow against. Borrowers pay back to the lending pool, and if their collateral gets way undervalue and gets liquidated to fiat, that fiat also goes to the lending pool. When a lender withdraws back their fiat investment with interest/yield it is also from the lending pool. Your collateralized crypto position should not be affected by anything but the market price of that crypto.
What is the APY for the pools for depositing ADA/MELD? How much collateral on the zero-interest loans?
The APY for the liquidity pools depends on trading traffic, the liquidity level and actual Smart Contract fees on Cardano. We'll announce more safe estimations as we have more stats to analyze, our economics model progresses more, and above all, simulating it aggressively against the testnet. You can check beforehand that we're going with the one-sided liquidity pool design (like Bancor 2.1), so borrowers don't have to deposit collateral in pairs that are very inconvenient and harder to follow. One of our difference is that we don't really need time-based impermanent loss insurance like them, as statistically, the impermanent loss has a very low impact after 100 days, which is quite lower than the average loan period. That said, as we already have deep pools thanks to large collateral to make fiat loans meaningful, we also want to invite direct liquidity providers to make the pools even deeper, the deepest in town, to enable massive liquidity and efficiency for traders. So to protect these shorter-term liquidity providers, we're going to use the staked MELD as insurance to offset the impermanent loss, with portions of the protocol fees fill the insurance pool in real-time for solvency.
What are the benefits of using MELD for crypto-backed loans?
MELD provides a fast, safe, and transparent set of tools for all participants to lend and borrow in the DeFi ecosystem. 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. Additionally, MELD provides impermanent loss protection for crypto depositors.
What is the process for obtaining a loan with MELD?
To obtain a loan with MELD, users must first download the MELDapp or go to https://app.meld.com/, create a wallet, and fill out all necessary KYC/AML procedures. Then, users can deposit their crypto assets directly to the MELDapp. This will instantly start generating yield for the asset provided and provide the user with the ability to borrow other tokens. The protocol requires deposited crypto assets before being eligible as collateral for a crypto-backed loan, or a line of credit. Once deposited, the user can withdraw up to 50% of the value of the underlying crypto asset as fiat or credit.
How does MELD protect lenders from default loans?
MELD protects lenders from default loans by issuing loans at a loan-to-value (LTV) ratio of 50%. If the collateral value falls to an LTV of 65% or stays above 50% for more than three days, a margin call happens. The customer must provide added collateral to bring the loan back to an LTV of 50%. The same happens if the LTV reaches 75%. If the LTV reaches 85%, a liquidation event is triggered where the collateral is converted to USD/EUR stable coins equivalent to the fiat loan plus a 5% fee.
What types of assets are accepted as collateral?
Currently, crypto-backed loans accept Cardano-based crypto assets such as ADA, MELD, C3, COPI, MIN, WMT, WRT, iUSD. Eventually the MELD protocol will be deployed on Avalanche, allowing the ability to deposit various ERC20 tokens, such as ETH, USDC, and USDT.
What are the minimum and maximum loan amounts?
There is no minimum to the loan and the maximum loan amount is 50% of the value held within the deposited crypto assets.
How long is the loan period?
As long as you want. You just have to ensure your loan-to-value stays in a healthy range (50%-85%), else you get liquidated if it surpasses 85%.
What is the interest rate for loans?
The interest rate is determined by the utilization of the asset. The fewer people borrowing it, the less interest, the more people borrowing it, the higher interest you will have to pay to borrow.
THE MELD ISPO
What was an ISPO? What did participants receive from joining the ISPO?
An ISPO was a revolutionary way for investors and the community to support MELD using the Cardano blockchain. Delegating ADA to the MELD ISPO stake pool rewarded participants with MELD tokens based on the amount and duration of ADA staked. The ISPO ran from July 1 to December 8. Participants staking for the full period received approximately 2 MELD for each ADA staked.
How was the delegation to the MELD ISPO done?
Choosing Delegate in the wallet.
Finding the MELD ISPO: In the delegation section, the MELD stake pools needed to be found. This was a simple search process - typing in MELD brought up results for all the MELD ISPO pools. Then a pool had to be chosen for delegation.
Delegating: Once the MELD stake pools were found, a pool could be chosen to delegate ADA into. Delegation involved clicking on the Delegate button, choosing the amount to delegate to that pool, and then confirming by clicking on the Delegate button.
What happened if staking started later, such as in August, resulting in less than 32 epochs of staking? Was the reward still approximately 2 MELD or was it 0.065 per ADA?
The reward mechanism was designed to offer 0.065 MELD per epoch on 100% pools like MELD3. Therefore, if a participant didn't stake for the full 32 epochs, the reward was based on the number of epochs they staked for. For instance, if staking started in August and continued until the ISPO closed in December (approximately 27-28 epochs), then the reward would be around 1.82 MELD per ADA staked, based on the equation (28 × 0.065).
How did the MELD ISPO raise funds, and what were the benefits for all parties?
Participants could easily join with just 1 ADA and a wallet like Daedalus or Yoroi, and no sign-up was required. All data was completely transparent on the Blockchain. Staking with MELD resulted in MELD tokens being airdropped to participants. They could unstake at any time and still receive the amount for the staked duration, which was available after the launch in December. Early stakers received more than 2 MELD for each staked ADA. The ISPO officially launched on July 1st, but over 60 early delegators had already joined. After the ISPO, the margin was reduced close to 0 for participants to get ADA rewards as usual. MELD did not need to cash out the ADA rewards, enabling continuous staking to help maintain the Blockchain and earn even more ADA.
Why were the coins only distributed on December 8th and not when smart contracts went live?
MELD was able to mint and distribute Native Tokens since early in the year. However, the compatibility of these tokens with the MELD protocol was uncertain. The goal was to ensure the MELD token had utility, as it was used in one-sided liquidity pools with algorithmic minting and burning, necessitating a complex Monetary Policy. The MELD team wanted to create the best policy for the MELD token before minting, rather than minting an inflexible token and adding friction later to make the Smart Contracts compatible with it. Hence, the decision was made to thoroughly test on the full smart contracts on the testnet before finalizing the policy for minting on the mainnet.
What was the difference between MELD1, MELD2, and MELD3?
MELD1 (100% MELD) (FULLY SATURATED): This ISPO offered 100% of rewards in MELD.
MELD2 (50% MELD 50% ADA): This ISPO offered 50% of rewards in MELD and 50% rewards in ADA.
MELD3 (100% MELD) (FULLY SATURATED): This ISPO offered 100% of rewards in MELD.
A link was provided for all active pools.
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