In keeping with a theme, this post is a practical example of DeFi theory put into practice. I will use my understanding of DeFi to explain how I think it could be done. At some point I would love to be able to interview @aggroed, @yabapmat or @harpagon and ask them about how the use cases for NFTs so far and to interview @neoxian about how this this type of Token could be used at the Neoxian Bank. It’s instructive to know that one of the important concepts underlying Steem-Engine is templates smart contracts and personalized JSON.
This is a breakthrough which allows Steem-Engine to function with out expensive smart contract developer use. This concept of templated multi coin smart contract with custom JSAN is also used by Enjin, who created the Ethereum ERC 1155 token, which is revolutionizing NFT use on the Ethereum blockchain through its multi token smart contract and customized JSANs providing less expensive development of coin use cases and other efficiencies on the Ethereum nlockchain. I speculate that this thinking is similar to what the Steem-Engine team is doing here, but would love to hear it from them.
Today’s example is a asset based loan.
Tools needed: Steem-Engine NFT, Neoxian bank and an asset: a treasury bill.
Actions to create the loan.
Purchase a 1000 USD par or face value a Treasury Bill for 960.00 usd, maturation date 14 days.
Using Steem Engine Create a NFT for that Treasury Bill
Approach Neoxian bank for a 900 SBD loan. This loan is 90% or less then the face value of the NFT. Loan rate 1.5% with maturation date 14 days.
Take the proceeds of loan in SBD and exchange for USD and obtain about 900 USD.
This example shows how we can take a real world asset, create a digital representation, borrow against it to free up real world cash while our asset continues to appreciate. Now we can use the cash to loan out at a favorable interest rate or reinvest in another appreciating asset. This is termed creating a credit facility in the banking world. And it is how banks solve the problem of opportunity cost. This could be done now on the Steem blockchain if Neoxian Bank accepts NFTs backed by securities for loans. Or someone else could enter this ecosystem and facilitate these transactions on the Steem blockchain.
- You could take the 900 USD and combine it with 60 addition USD and purchase another 14 day Treasury Bill with par or face value of 1000 usd and maturation in 14 days. Thus doubling your profit using this credit facility.
This is just one way to create this credit facility. There are others. Think about what happens if you scale this up by ten or one hundred.
Stay thirsty for knowledge my friends.
✍️ By Shortsegments.
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