Large loans in monero
Large loans in monero
How would you go about doing this? As an example, if you loaned someone 167 monero to buy a car and expect them to pay you back in 7 years like a bank does you would be requesting 167xmr*6.02% (to counter xmr inflation) for a total of 177.053xmr. 177.053xmr/84 (months in 7 years) would be 2.107xmr a month. At the moment that is fine, but if the usd price of monero rises and the borrower is being paid in usd then they are going to default and you will loose the xmr. The only way I could see to counteract this would be to lower the Monero payments per month, but then that would take even longer to be repaid.
Typically in multi-currency contracts, the payment schedule is denominated in the same currency as the asset. So if the car is purchased in Vietnamese dong, the repayment schedules denoted in Vietnamese dong. You could accept xmr for each individual payment, with some specification to the conversion rate.
If you don't denominate the payments and the asset in the same currency, you run into situations where one moves and the other doesn't, and one party is left holding the bag. So if you believe XMR is going to go up you are incentivized to denominate the repayments in XMR, but if you bet poorly, you better have a hedge available.
Most jurisdictions require payments to be accepted in the local currency. So even if you specified an XMR repayment rate, the person could still pay you in the local currency.
Not to mention when you add foreign exchange to transaction now you've got weird incentives going on. If XMR crashes, one party would not want to get paid in XMR. And if XMR rises too much, they would prefer to default and give you the vehicle instead of paying you the XMR.
Don’t ever loan cash or cash equivalent to friends unless you’re okay with never getting it back.
Oh, I know. I'm talking about a business that would loan money to people and vet them like current banks do with credit scores.
Some financial alchemy would help. The borrower would need to buy some derivative that pays off if monero goes up, like a call option. Impossible to find today and possibly expensive for low amounts.
I think eventually Haveno could be made capable of doing this.
Loans in XMR/BTC could make synthetic bitcoin for holding somewhere and then withdraw after volatility periods
I think only XMR-denominated collateralized short-term Lombard KISS loans (keep it simple stupid) will work. I can loan anyone minimum 100k XMR to maximum 5M XMR against appropriate physical or digital collaterals e.g. marketable NFTs, crypto tokens, staked tokens, authentic paintings of masters, sculpture, modern kinetic arts, NFTs, diamond jewelry, solitaire polished loose diamonds with GIA lab certificates, timepieces like Rolex, Ulysse Nardin and Jacob & Co and physical gold bullion of 999 and 995 purity.