Salt Lending, the Ethereum powered lending network is about to go live later this month. As a result, SALT tokens have more than doubled in value and will likely continue this trend leading up to the platform launch. Read on to learn why this is happening.

What is Salt lending?

Salt is an innovative financial platform that allows users to take out loans in exchange for using their cryptocurrency as collateral. Normally, in order to get a loan, one would need to have good credit history and pass a credit check. This can be problematic for a large number of people.

For example, younger generations that do not have long credit histories will not have high credit scores in general. People who come from countries other than where the lending bank is located will likely not have any credit history. Finally, those who have amassed their fortunes in cryptocurrency may have chosen to keep their assets outside of the traditional financial system.

Instead of relying on a credit score, Salt Lending allows participants to take out loans and use their cryptocurrency as collateral against defaults. Once the loan is repaid, the borrower gets all of their cryptocurrency back in return. At launch the platform will only accept bitcoin, but they have stated they will eventually support all major cryptocurrencies.

A Salty Solution to a Common Problem

For many, this may be an optimal solution to meet a sudden financial need. Normally, if someone who holds cryptocurrency suddenly needs to pay a large expense, such as a medical emergency or a down payment on a new house, their only course of action would be to sell some or all of their crypto assets.

Once they have met their financial obligation and they attempt to re-purchase their previous crypto assets, it’s quite likely that the costs or prices will have gone up. This means that not only did they have to pay transaction fees to sell their crypto, they also suffered a capital loss from needing to cash out early. Using salt could protect a borrower from this kind of loss. Famous

Using Salt could protect a borrower from this kind of loss. Famous bitcoin evangelist Andreas Antonopoulos stated on Twitter recently that back in 2013 he was forced to sell all of his bitcoin in order to pay rent. If he had the choice to borrow against his bitcoin using something like Salt, he would now be a much wealthier individual.

SALT Token Valuation

The tokens for the platform were originally selling for around $3 each once they hit the open market. Now they are getting close to $8-$9. This means that they have than more than doubled in just a few months since they became available. The reason for this is two-fold.

First, the platform is expected to go live later this month. While Salt has refused to give an exact date, they have been resolutely repeating that they will be live this month. Once the platform is live, the tokens will be immediately useful.

Second, we need to understand what the tokens can be used for. At the present time, when the platform is live they will have two uses. The first use is to purchase membership at the Salt website. In order to get a loan you will need to have a membership.

The lowest membership costs one salt per year and allows for loans up to $10,000 at a time. Higher tiers are available and loans up to $1 million are possible. These require a much larger salt price however.

The second use of the tokens is to use them to reduce the interest rate of a loan. Up to a certain point, a borrower may choose to spend Salt tokens in exchange for a lowered interest rate.

This can save a lot of money especially on larger loans. Eventually, the company has stated that the tokens can be used directly as collateral against a loan.

In all of these cases, the official valuation and usefulness of a single token will always be equivalent to $25. It is for this reason that it is safe to say that all tokens on the open market will eventually have a price that is consistently near $25.

There are several competitors to the Salt Network, such as Celsius and Ethlend. Salt, however, will almost certainly be first to market, and therefore may be able to achieve dominance as a result.

The company has also stated that over time the official valuation and usefulness of a token may be increased as market needs change.

Posted by Robert DeVoe