The network allows cryptocurrency holders to gain direct access to the mortgage investment industry, which is currently dominated by governments and banks.
Bacon protocol officially launched the decentralized mortgage lender today where members and investors of the crypto industry can enter the housing market by a new USD Coin (USDC) and home loans backed stablecoin.
Bacon also stated on Tuesday that it will perform a public sale of the bHome token, which is characterized as a Stable+ Coin that is backed “dollar for dollar” by USDC, liens, and loans on property in the US. Early buyers will be eligible for additional benefits in the form of the BACON governance token.
The Bacon Protocol works by allowing homeowners to trade a lien on their home for an NFT, that reflects a portion of the home they bought. The NFT provides buyers with collateral in order to gain access to other crypto markets, such as decentralized finance (DeFi). LoanSnap, a financial services startup backed by Virgin that helps American homebuyers save on interest rates and other associated expenses, will initially handle the entire transaction.
The mortgage market is a maze of a constellation of financial institutions including corporations, borrowers, governments, and banks. $11 trillion was the total value of residential mortgages in the US in 2019.
Notwithstanding historically low interest rates, the market draws large investors looking to collect mortgage and lien interest payments. Each year, it is estimated that banks, corporations, and governments purchase approximately $2 trillion in mortgages. Meanwhile, as of Thursday, the Federal Reserve’s balance sheet contained nearly $2.5 trillion in mortgage-backed securities.
Although some mortgage lenders have shown interest in accepting cryptocurrency payments, the sector has so far remained mostly outside of DeFi’s purview. As new inventions continue to cross the gap between these two realms, this could soon alter.
Bacon Protocol backers, such as Alex Pall of The Chainsmokers startup fund, feel that blockchain changes can deliver mortgage investments to a broader audience. Large banks right now earn billions of dollars in interest on their mortgage assets each year.
Also read: IRS Commissioner: Crypto Tax Enforcement Takes Precedence
