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RE: SALT ico today
Once your cryptos are converted to fiat, what do you get in return for your investment- fiat? You then lose the appreciation value of your cryptos.
Once your cryptos are converted to fiat, what do you get in return for your investment- fiat? You then lose the appreciation value of your cryptos.
I said "hedged with leveraged shorts", not converted to fiat. Short-selling is when you borrow the asset being traded in order to sell it with the implicit promise to settle the debt at a later time (either by directly settling the debt, or buying back the shorted asset). If you hold BTC and wish to hedge against volatility, you can can shortsell an equal amount of BTC - then, if the price goes down, the coin you hold loses value but your short contract gains an equal amount of value; if the price goes up, you short contract loses in value while the coin you hold increases by an equal amount. The loan of the BTC you are shorting must be collateralized, but the collateral ratio can be less than 1:1 if you short with leverage (with 5:1 leverage, you only need 20% of the equivalent value in collateral).
Off the top of my head, I'm a little uncertain on how to apply the principle to the manner of secured loans they are offering, but I don't see another way they can possibly make good on the promise of returning the coin you put up to secure a loan, rather than the dollar value of it a the time that you borrow.
If they need to hedge with leveraged shorts then it just telling me that they do not have a stable plan going forward. To me a loan company is all about stability and consistency of income.
I'm speculating about how they might be doing it, and I could be way off. I also don't see how using industry standard techniques for hedging come off as not having a stable plan going forward. To reiterate, I could be way off. Does anyone have a different/better idea about how they might be able to make good on their sales pitch?
I guess we will know the answer when it goes live. They will have devised a way to skim their share of the profits from the investors after all they are backed by bankers!
I'm speechless.