Coinloan - invest in crypto backed loans

Interesting site, but allowing LTV of up to 91% without a margin call strikes me as extremely high risk, considering how quickly cryptocurrencies can fall. Compare this to other crypto lending platforms: Compound liquidates at 150% coverage (66% LTV) and dYdX at 125% (80% LTV). Furthermore, those are effectively "pooled" so that you're not individually at significant risk from one borrower's default. On the safer side of the spectrum, there are centralised platforms like Nexo and Celsius. In particular, Nexo pays 8% on euro balances with instant access, which seems rather generous in light of the current low P2P yields.

Overall, I think the borrowers on these platforms are overpaying a lot. They put up a liquid, easy-to-value collateral subject to automatic liquidation at any time, yet they pay 16% for euro loans when eurozone interest rates are in sub-zero territory. Talk about a raw deal!

Well, I decided to sign up for Coinloan to get a feel for it myself. Of course, it's too early to comment on it further.

As for fairness of the deals: A mortgage is generally (and in Basel III regulations) considered the safest kind of private loan. It is secured on a relatively illiquid asset that the owner (or their tenant) can damage, impairing its value. It takes a long time to foreclose on it, and selling it may also take a long time, at least outside large cities. A crypto loan is secured on very liquid collateral that the borrower has to deposit at the platform, so it can be seized and sold in seconds when needed. If we ignore the asset's higher volatility, it logically follows that the crypto loan is at least as safe as a mortgage. Yet mortgages in the eurozone have interest rates of maybe 2%, while crypto loans go for 15-16%, or in the case of Nexo's special offer, "just" 8%. That, to me, is a mispricing of risk.

Everything is relative, but when Metrokredit/Tengo/etc. pay 10% for loans backed only by a guarantee from a dodgy small company whose financial statements are vague or missing, an 8% interest rate for a secured, overcollateralised loan is relatively very attractive in my opinion.

Disclosure: I also own some Nexo tokens (a modest amount).

Of course you have a point. I was somewhat overstating the case to stimulate discussion. The platform also has execution risk (especially wrt hacking) and risk of fraud (since there's no way to verify all the stated collateral exists).

That being said, if you are only looking at the company's registered share capital (which indeed is 2500 eur), you may be missing the fact that they raised over $3 million of funding in an ICO, which rather undermines the accusation of it being badly capitalized.

According to this the soft cap in the ICO was $3 million, and this was the official announcement that the soft cap had been reached in Dec 2017. The token sale was extended to end in Feb 2018, so clearly the total raised must have been higher than that. However, I couldn't find the exact amount raised with a quick Google search, so disclosure here leaves something to be desired, as usual in the P2P field.

Thanks jmot , useful info there. Interesting that the "operating" company seems to have no relationship to the actual business, since neither the costs nor the income flow through it. These guys have at least two entities, CryptoFinance OÜ (14337507) and ExFinance OÜ (14453478), but they haven't published details of the legal structure, so the whole thing is basically a black box.