Bacon Protocol, the decentralized mortgage lender, has launched a platform for mortgage and home loans, allowing cryptocurrency investors to participate in the housing market through a new stablecoin that’s backed by USD Coin (USDC).
It has been reported that Bacon is holding a public sale of bHome token, which is described as a Stable+ Coin that’s backed “dollar for dollar” by USDC, liens, and loans on properties in the United States. Early participants in the sale will be eligible to receive additional rewards via the BACON governance token.
However, Bacon Protocol works by giving homeowners the ability to exchange a lien on their property for a nonfungible token (NFT) that represents a percentage of the property they purchased. The NFT gives buyers collateral to access other crypto markets, including decentralized finance (DeFi).
The report said that the entire process will initially be facilitated by Virgin-backed LoanSnap, a financial services company that helps American homebuyers save on interest rates and other associated costs.
Likewise, the US mortgage market is a complex ecosystem comprising banks, corporations, governments, and borrowers. In 2019, the value of all US residential mortgages was estimated to be worth $11 trillion. Despite record-low interest rates, the market attracts big investors keen to collect interest payments on mortgages and liens. It’s estimated that banks, companies, and governments purchase over $2 trillion worth of mortgages each year.
Meanwhile, the Federal Reserve has over $2.5 trillion worth of mortgage-backed securities on its balance sheet as of Thursday. While some mortgage providers have expressed interest in accepting cryptocurrency payments, the industry has largely fallen outside of DeFi’s sphere of influence so far. That could soon change as new innovations continue to bridge the gap between these two worlds.
Thus, the backers of Bacon Protocol, including Alex Pall of The Chainsmokers venture fund, believe blockchain technology can bring mortgage investments to mainstream audiences. Currently, major banks earn billions of dollars in annual interest on their mortgage holdings.
Source: Cointelegraph
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