Since the launch of Bitcoin in 2009 and Ethereum in 2015, the crypto community has been dreaming about ways they can liberate themselves from the confines of traditional banking. Attending a local crypto meetup you might hear conversations of people talking about paying for their day to day expenses in crypto. The truly ambitious crowd might even talk about using their crypto to finance a large life purchase like the new car they’ve always wanted. Yet, here we are in 2021 and many of the early inspirations have not materialized.
How incredible would it be to finance something like a home mortgage? No more investing endless hours of your time filling out paperwork and trying to convince a banker and their black box algorithms why you are a good borrower. Not a high enough credit score? Sorry. Self employed? Eh, you don’t make the cut. If only only you could bypass that system altogether…
When the Notional Finance protocol launched on January 13th, one of the very first users took out a fixed rate loan against their crypto and used the proceeds to pay off their entire mortgage. Adios traditional banking and hello DeFi!
Before we revel too much in just how cool the early use case of the Notional protocol is, it’s first important to understand why financing a mortgage has taken the crypto world so long to figure out. Here’s a list of barriers that have now been overcome:
A blockchain flexible enough to write a financial contract into code — enter ethereum
A USD/fiat denominated cryptocurrency to denominate the loan in — enter USDC, DAI, USDT, and others
A protocol that enables fixed rate lending — enter Notional.
With the above barriers out of the way, it’s time to #RefiwithDefi. Here’s what that looked like for the early Notional user:
- Deposit crypto collateral on Notional: https://notional.finance/borrow
- Borrow USDC/DAI against your posted collateral
- Convert your USDC/DAI to fiat and send to your bank account using a local off ramp
- Pay off your mortgage
The importance of being able to take a loan out that is locked in at a fixed rate for something as large and long term as a mortgage cannot be understated. The particular user who did this exact thing on Notional when we launched cited that he’s been waiting for a fixed rate lending product to hit the market so he could execute his strategy. The best part yet is that he can continue to get exposure to the crypto market with his underlying collateral and isn’t beholden to any central authority or loan servicer.
Finally you can be your own bank in every sense of the phrase. So what are you waiting for? Say goodbye to your bank and borrow on Notional today!
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