Have you ever visited a Pawn Shop? I have occasionally dropped into them looking for the "hidden gem" thing, I also like to go to Garage sales, but I'm a bit of an odd duck.. A friend of mine who had been in the Pawn Shop bis and I had a conversation about Crypto, specifically about the defi sector. He mentioned that he thought a lot of the Crypto lenders out there were acting just like he did in the old days, with a few caveats. It's basically the same, he replied, somebody who comes in the door with an asset like a guitar, wedding ring or tools that wants to sell them or borrow money using them as collateral. Other than the person's ID & phone number, he would lend money based on a inflated interest rate, or buy their goods for an undervalued amount. So is the next thing we are going to see are Crypto Pawnshops filled with NFTs in them?
When you look at how most forms of borrowing and lending in DeFi are happening today, is through overcollateralized loans. To get $200 loan in tether, one needs to put up $250 worth of ETH as collateral.They don't care what your credit history is, as long as you have the required collateral, and yes, just like a pawn shop, the interest rates are a wee bit higher... They don't really know (or care!)who you are, and they don't ask you where you got your coins from. So their only protection is to keep an asset (at the moment!) that is worth more than they are lending you, like a pawn shop. The big question is how this will play out with all the volatility in the market place that is happening right now. Considering all of a lot of DeFi boys have, is a bunch of coins or tokens that move up & down in value quickly. and that quite a few investors have staked their coins to their platform, stability and return on investments could be quite shaky. I'm probably the first one to not want government oversite on any crypto investments, but my thoughts stray to the idea of no rules, no control, and chaos runs rampant though the global DeFi investment marketplace.
Based on the comments from my friend, I started to look at what was happening in the global marketplace, I was a bit shocked by what I found.
Crypto-Zastavarna.cz pays investors an amount equal up to 70% of the current Bitcoin price at Coinmarketcap. For the pawnshop service you pay from 0.33% interest per day, depending on the chosen tariff.
https://crypto-zastavarna.cz/en/
A large network of pawn shops in Ukraine will be launching a new lending service in which loans are secured using cryptocurrency. With more than 300 branches under its arm, the pawnbroker is planning to offer loans depending on the type, amount, and price of crypto collaterals.
https://www.coinwire.com/largest-ukrainian-pawnshop-network-to-launch-crypto-secured-loans
A group of lenders has emerged to help miners and bitcoin holders turn some of their cryptocurrency into more easily spendable fiat funds, without having to sell their coins.
So just when I thought I knew a lot about crypto, more stuff surfaces, this is the new age Wild, Wild west of Finance