Bitcoin (BTC) whales are using their crypto assets to acquire loans for real estate purchases without having to sell off their assets, thereby avoiding capital gains tax. This emerging trend is picking up steam among Bitcoin millionaires who fail to meet the traditional standards of real estate financing.
One of the main benefits of this model is that using Bitcoin as collateral does not attract capital gains tax. The reason for this is that taking a loan against an asset is not a taxable event in most jurisdictions. It ensures holders can access their liquidity while retaining the potential upside exposure.
This concept is quickly gaining traction in the mainstream financial world, although it has been in the DeFi world for many years. A good example of this is Mutuum Finance (MUTM), which plans to launch a DeFi lending protocol that will allow borrowers to unlock liquidity while still retaining upside exposure to the assets.
A Deep Dive into Mutuum Finance (MUTM)
Mutuum Finance (MUTM) is designed as a decentralized non-custodial protocol where users can participate as lenders, borrowers, or liquidators. As lenders, they can deposit their assets in a pool in exchange for interest payments.
The interest rate they receive on their assets is set dynamically based on the pool utilization rate. As the interest rate rises, it pushes borrowers to repay their loans, while lenders are incentivized to deposit assets to benefit from the higher yields. Over time, this process leads to a positive feedback loop that ensures optimal capital efficiency.
For borrowers, there is the option to choose between stable and variable interest rates. When they pick the stable interest rate, it is calculated based on a time-weighted price average of the variable rate. It often starts higher than this variable rate to account for the more predictable repayment and the possible price movements. If the variable rate gets significantly higher than the stable rate, it can be rebalanced to ensure fairness on the protocol.
Protocol Protections
To protect the assets of lenders and ensure the overall protocol’s viability, Mutuum Finance (MUTM) has several safeguards in place. One of these is the overcollateralization requirement. It ensures that in case market movements cause the value of collateral to start falling, there is enough of a moat for liquidators to act, and purchase the debt at a discount, thereby stabilizing the ecosystem.
Another safeguard is the loan-to-value (LTV) ratio. The LTV is based on the overall characteristics of an asset and determines how much it can borrow. For instance, if ETH has an LTV of 80%, it means that a user with 1 ETH of collateral can only access up to 0.80 ETH worth of assets. The LTV for higher volatility assets will usually be lower to account for possible market movements.
The other important safeguard is the liquidation trigger. This is used to determine when a debt is undercollateralized, necessitating liquidation. For instance, if the collateral borrowed amount surpasses this limit, which could be 65% of the value of the collateral, that position is deemed unsafe. Liquidators then step in and acquire all or part of the collateral, helping to stabilize the protocol.
The MUTM Token Presale
Mutuum Finance (MUTM) is currently in the presale phase, where tokens are going for $0.03 in the current phase 5. In phase 1 of the presale, the tokens were going for $0.01, and the price has since risen by 200%.
The token price is set to go up by 16.67% in the upcoming phase 6 to $0.035. So far, over $10.8 million has been raised in the ongoing presale from around 12,200 presale participants. The presale has experienced a massive surge in participation lately, with 40% of the tokens set aside for phase already sold, barely two weeks after they launched.
One of the catalysts for this fast pace is the planned beta version launch. The Mutuum Finance (MUTM) revealed that on the token listing day, they will launch a beta version of their platform, allowing the masses to test out its features. This is expected to generate a massive amount of organic traffic for the project, which will translate into massive upside for MUTM tokens.
Besides the beta version launch, Mutuum Finance is CertiK-audited and has a Token Scan Score of 80 on CertiK. That has continued to be a massive source of trust in the project, which has translated into more purchases in the presale.
Summary
Mutuum Finance (MUTM) is an exciting project that is in the presale phase. Trump’s recent financial disclosure augurs well for the crypto sector, as it shows an administration and a president who has fully embraced the crypto sector. Over the coming months, it could help to build up momentum for an altcoin rally, sending MUTM tokens to new heights.
For more information about Mutuum Finance (MUTM), visit the links below:
Website: https://www.mutuum.com/
Linktree: https://linktr.ee/mutuumfinance
