Salt’s Recent Rise and the Potential of Cryptocurrency Lending Platforms

Ethlend, Salt, and Nexo are some of the most popular cryptocurrency lending platforms in the sector. These coins are ERC20 tokens built on the Ethereum blockchain. Salt has been drawing a lot of attention recently by increasing 50% in a period of just 48 hours. The action occurred during the first week of October and the increase in the price of Salt can be attributed to the project’s recent announcement: Their addition of Litecoin to the Salt platform. This news is not very significant when compared to Yale’s endowment fund becoming involved in cryptocurrency, or a massive institution such as Fidelity entering the crypto space. Nevertheless, just a bit of positive news was enough to revitalize this smaller cryptocurrency.

Salt is generally a more volatile cryptocurrency because it has a lower market cap of $48,799,486. (Ranked 113 on coinmarketcap.com). Cryptocurrencies with lower market caps will often be pushed around by larger whales and ‘manipulation.’ Salt limited their social media presence during the bear market and some journalists began to speculate if Salt was still operational. Some journalists even declared that Salt was dead. Salt’s massive price decrease was surprising considering the company is backed by a strong team including Shawn Owen (CEO). Additionally, Erik Voorhees, the CEO of the exchange ShapeShift, also serves as an advisor. As a result, it only took a bit of positive news to rejuvenate the interest around Salt.

There are comparable platforms to Salt. For example, Ethlend is another cryptocurrency lending platform which specifically denominates their loans in Ethereum. Ethlend is in a good position to thrive in a bull market considering it has formed promising partnerships. One of Ethlend’s most notable partnerships is with brickblock.io, their partnership aims to initiate lending on the blockchain with real-world assets such as real estate. One downside to Ethlend is that all of the loans are denominated in Ethereum, which presumably limits the platform to some respect. Overall, both have effective technologies, but in the end, the platform with the most users will be the most valuable. Currently, Salt is in a very nice position with over 70,000 members  and over $50,000,000 in loans already dispersed. Although some may argue Salt has a unique advantage over the lending market, other platforms such as Ethlend & Nexo will have ample opportunity to expand and thrive in a bull market. Naturally, a bull market initiates a risk-on market psychology which can only be beneficial to lending platforms.

One of the likely reasons Salt has been relatively quiet is because individuals are reluctant to take out loans during a strong bear market. However, in a bull market when prices are accelerating and FOMO is overwhelming, cryptocurrency lending platforms have the potential to see a vast increase in usage.

During the 2017 bubble, the media hyped Bitcoin and cryptocurrencies by equating them to a modern day gold rush. This media coverage created a frenzy which instilled the belief in many average people that they were missing a ‘once in a lifetime opportunity.’ This psychological mindset can be extremely dangerous because it is essentially the same mindset found in gamblers and participants in ‘get rich quick’ schemes. Experienced investors will not FOMO into a market. After all, why cry over spilled milk when there’s another glass coming around the corner.

But this is not how inexperienced retail money invests in the cryptocurrency market. During a elated bull run many unfortunate individuals will take out cryptocurrency loans so they can bet on an inflated bubble with money they don’t have. In the short term, meaning 1-2 years, Salt loans will help stimulate price in the next bull market and will provide an actual use case for retail investors. But long term, meaning 5-10 years, Salt is in a good position to serve as a key element of infrastructure in the cryptocurrency market. The success of cryptocurrency lending platforms will help institutional borrowers eliminate costs related to liquidating, transferring, and storing assets. Salt’s smart contracts will automate many of the processes involved in the application and monitoring of loans, which will ultimately reduce cost for borrowers.

Furthermore, the most popular cryptocurrency lending platforms may be undervalued considering they create a way for individuals to increase their returns in a coming bull market. Although Salt was relatively quiet on social media this summer, they tripled their staff and increased the number of jurisdictions that they can legally tend in. These areas include New Zealand, UK, and over 1/2 of US states. The current problem is that there is a lack of demand for cryptocurrency loans in a bear market. In a bull market, with a risk-on investment psychology, lending platforms have the potential to see a vast increase in usage.

Disclaimer: I am not a financial advisor. This is not financial advice. Please do your research independently and make objective decisions. This article is intended to educate readers on the purpose and potential of the cryptocurrency SALT. The author of the article owns cryptocurrency.