IME: Interest rates matter. The lower the better. I think 12% APR is high. There are loans for less. "Interest rate arbitrage."
If the loan is 12% APR (1%/month), then the proceeds need to be 2x or more. There are places where you can get loaner loan rates for like 4.5-5% ARP (0.375%/month).
Having an "exit" strategy helps just incase the deal goes south, too.
*lower loan rates
12% is crazy high
Going rate on most BTC only lending services.
Sovyrn has a 0% APR, though I've never used them.
Morpho has a 4-5% APR... but you gotta swap to cbBTC...
CoinRabbit has been a go too, though I'd only use it for short term loans (3 to 6 months)
I know Strike, Ledn, Unchained, River and others are at 12%+. Not great.
Wouldn't wanna trust anyone that touches crypto or rehypothicates or has that crazy interest rate so options are zero rn
That's the main issue with loans. No matter who it isā rehypothicates or crypto touching or notāthe main issue is always going to be trust.
The other side of it all, even if its 0% APR, you're giving up custody of your bitcoin. Even with multi-sig keys.
Loans should be used like spare tires on a car.
Good for a little while. Just don't go long distance with them.
Not crazy high in comparison to other fiat loans out there. Yes, way higher than the 6-7% on a mortgage but way lower than credit cards. Pretty much in the ballpark of HELOCs or fixed 2nd loans people take out on their homes to get some cash.
This market will improve as time goes by, it will be much more beneficial in the future.
Iāve been in fiat lending for over 10 yrs and Bitcoin lending is really exciting. It will open up a ton of doors for people. Iām not sure if CJ Konstantinos is on Nostr but he has some great takes on the subject.
Totally hear you on rates fitting in there.
But given the liquidation risk on the consumer and the decreased risk for the loan company, the rates are CRAZY high
For sure. It just depends on where they get the capital from. We know itās crazy high for the risk theyāre taking (pretty much none) and so does Strike, but they donāt have the money required to run this lending operation. They get it from somewhere in fiat land where the understanding of BTC is completely different. Strike has to pay to get that money so they can lend it out. To make a profit, they charge 12%. Once the BTC lending market matures and fiat land realizes the risk of these loans, rates will naturally come down.
