Decentralized finance (DeFi) is one of the hottest topics in crypto right now, and leading the arena with the best and most promising DeFi projects is Ethereum (ETH). One such project is the fintech startup Fluidity, which is launching the first Ethereum-powered mortgages in California and New York.
Fluidity was just formed at the beginning of 2019 and is backed by several shareholders, including veteran crypto investors like Mike Novogratz, Brock Pierce, and Bill Tai.
As reported by Coindesk who received insider information, the offering by Fluidity will be launching this summer and is poised to benefit the Ethereum ecosystem in a big way.
Speaking on this innovative project, Fluidity’s chief architect Todd Lippiatt said:
“We’ll tokenize the house, which will effectively take the collateral that is the equity of the house. You’re pledging the house and you get an advanced rate back in terms of dollars.”
Fluidity’s Ethereum-Powered Mortgages
As a DeFi cryptocurrency company, Fluidity’s upcoming mortgages will use Ethereum smart contracts and cryptocurrency for back-end management. Lippiatt reportedly told Coindesk that they are currently exploring lending platforms in the Ethereum ecosystem like MakerDAO’s dollar-pegged DAI loans.
According to Lippiatt, neither the borrower nor the property seller will directly touch cryptocurrency, as Fluidity will deal with the inner workings of the complex decentralized system.
Adding to this, he said:
“The borrowers pay back in dollars and we will also be managing the risk profile of the underlying securities.”
Moreover, Lippiatt said that underbanked and low-income borrowers who pass the online credit check and are able to make repayments will benefit from these loans because fluidity intends to offer cheaper rates than banks.
“Our methodology provides better pricing that is determined solely by the intrinsic credit of the transaction, as opposed to external factors like domestic central bank governance policies and political trade winds.”
How will Fluidity’s Ethereum-powered mortgages impact Ethereum’s adoption and its ecosystem as a whole? Let us know what you think in the comment section below.