Peer-to-peer lending platform Bondster has begun offering loans secured by Bitcoins, with the first batch of crypto-backed loans selling out within a single day.
The Prague-based platform issued its first Bitcoin-backed loans last week and reported “unprecedented interest” from investors. The platform will now continue to offer Bitcoin-backed loans on an ongoing basis, with an expected annual return of between 10 and 11 per cent.
Bondster said that investors will be protected in the event that the value of Bitcoin falls sharply, with borrowers responsible for making up the difference in the price. In this situation, the loan originator – the Czech company Acema – would immediately sell the collateral on the Bondster exchange in order to pay investors as quickly as possible.
All loans secured by Bitcoins will be subject to a buyback guarantee, which is applied in the event that the borrower ceases to repay the loan. In this case, the originator would pay the investors the entire amount that they have invested, including the interest earned.
“The number one priority for us was maximum safety,” said Bondster’s chief executive Pavel Klema.
“The loan-to-value (LTV) ratio for this type of secured loans is therefore 50-70 per cent. At the same time, loans come with the buyback guarantee which applies both to the event of default and early termination, so that investors will not lose their money or interest. These will always be paid out to them in full.“
“A few days ago, we achieved the 13,000 investor milestone on the platform, and investor interest in terms of the amount of money invested in April has returned to pre-pandemic levels,” Klema added.
“In this context, I firmly believe that loans secured by Bitcoins will further accelerate the growth of the investment platform Bondster.”