The new lending service will require miners to put up as little as 10% collateral of the total loan value, helping them expand more quickly.
CoinList, a well known token sale platform for beginning stage projects, is presenting a lending service that will require low collateral upfront to borrow filecoin (FIL), specifically for new miners to start mining.
The organization aims to assist new miners lower their upfront cost by providing a FIL borrowing facility that requires collateral of just 10% of the total loan value. "By allowing for lower collateral, storage providers can allocate their funding to store [f]ilecoin+ deals, hardware and operations, rather than FIL or other forms of collateral, allowing them to scale their operations exponentially," CoinList said in a statement.
To start mining FIL, new miners usually need to promise some FIL tokens into the distributed data storage network; to do as such, they need to either buy or borrow the coins on top of the capital they have already invested for the capacity.
This is the "biggest pain point for newer storage providers" as borrowing the coins normally requires a high level of collateral upfront, ranging anywhere from 100 % to 130%, Scott Keto, chief operating officer of CoinList, told CoinDesk, adding that it's "just not an efficient use of capital."
Filecoin was planned by Protocol Labs to allow users to rent the hard drive space to store information in a decentralized system. It uses in a storage consensus system, passing out rewards to nodes that store and verify the information.
CoinList has had a relationship with Protocol Labs since 2017, which enables CoinList to gain access to a wide variety of FIL holders and source individual loans more than 250,000 FIL, as according to a statement..
CoinList is able to secure FIL from different sources including through its lending platform, which offers around 9% APY for a holder of FIL to loan their coins, according to CoinList's site. The platform also sources FIL from different holders through CoinList's relationship with Protocol Labs. "Given CoinList's strong relationship with Protocol Labs (worked together since 2017, Including the filecoin launch in 2020) CoinList has a lot of FIL holders on its platform," said a CoinList spokesperson.
"With more and more enterprises exploring Web 3, secure and Trustworthy data storage has never been more significant," said Stefaan Vervaet, the storage provider lead at Protocol Labs. "This is an incredible opportunity for all storage providers, but especially new and smaller ones that are looking to grow fast, while storing real user data."
The miners can give the 10% collateral in FIL, bitcoin (BTC), ether (ETH) or stablecoins USDC and USDT. The remainder of the loan will then, at that point, be collateralized by Via the miners' future earning of FIL they get as an rewardfor providing storage space.
The minimum loan size is 3,000 FIL. With low collateral, the interest rate tends to amount to around 10% to 30%, depending on the provider, as per Keto.
Exponential development
To be sure, there are different platforms that are giving FIL loan services, including Binance and Youhodler, as demand for decentralized storage space rises. In fact, CoinList has already loaned more than $450 million in FIL since October 2020.
"I believe there will be exponential development in 2022" for the decentralized storage providers, partly because of these new loan programs, but also due to the attractiveness of the business, Keto said.