The decentralized mortgage lender Bacon Protocol was officially launched on Tuesday, allowing crypto investors to enter the housing market through a new stablecoin backed by USD-Coin (USDC) and home loans.
In addition to launching its protocol, Bacon announced Tuesday that it was holding a public sale of the bHome token, referred to by USDC as the “dollar-for-dollar” backed stable + coin, liens and real estate loans in the United States states. Early participants in the sale are entitled to additional rewards through the BACON governance token.
The Bacon Protocol works by allowing holders to swap collateral on their assets for an Inviolable Token (NFT) that represents a percentage of the assets they have acquired.
NFT offers buyers collateral for access to other crypto markets, including decentralized financing (DeFi). First, the entire process is aided by LoanSnap, a Virgin-backed financial services company that helps US homebuyers save on interest and other related costs.
The US mortgage market is a complex ecosystem of banks, corporations, governments, and borrowers. In 2019, the value of all U.S. residential mortgages was estimated at $ 11 trillion.
Despite record low interest rates, the market is attracting major investors interested in collecting interest payments on mortgages and loans. It is estimated that banks, corporations, and governments buy more than $ 2 trillion worth of mortgages each year. Meanwhile, the Federal Reserve had more than $ 2.5 trillion in mortgage-backed securities on its balance sheet as of Thursday.
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While some mortgage providers have expressed an interest in accepting crypto payments, the industry has so far been largely beyond DeFi’s control. That could change soon as new innovations continue to bridge the gap between these two worlds.
Proponents of the Bacon Protocol, including Alex Pall of venture fund The Chainsmokers, believe blockchain technology can bring secured investments to mainstream audiences. Currently, the major banks are making billions of dollars in interest on their mortgages annually.