Lets break down the basics!
In crypto, specifically DeFi, we’ve constantly had romanticized ideas about what the future of finance could look like. Permissionless access, open source software, decentralization, composability on and on and on.
But since the advent of MakerDAO what true innovation have we seen? Copycat chains that have copycat dApps. We’ve just scratched the surface of what decentralized finance can offer to the world, and BaconCoin will be at the forefront - innovating DeFi and giving real world use cases for regular people.
BaconCoin is a completely new type of decentralized financial system that helps fund loans against houses (i.e. mortgages) making the process faster, cheaper and more flexible.
Let’s Start with the Banks
Banks traditionally have dominated the mortgage industry.
What is a mortgage, you ask?
A mortgage is a loan secured by the value of a home. It’s a promise to repay a certain amount of money, little-by-little, to help you purchase and own a home.
Banks love mortgages. Why?
It’s one of the safest investments banks can make. They receive 3-6% interest income and their risk is offset by their ability to foreclose on a home if the payments are not made. It's a great low risk investment.
The problem?
It’s almost impossible for the average investor to access this incredible diversification opportunity. It requires a large lump sum of money, pricing out a vast majority of investors - until now.
Bring on the Bacon
BaconCoin brings the same power and value that mortgages give banks, financial institutions and governments to anyone who can buy cryptocurrency. Not only can you own a coin backed by loans on homes, but you now have the ability to see exactly which homes those are– radical transparency.
How is this done? With 4 key ingredients:
- Pans- The smart contract that pools the funds for mortgages - helping fund the loans given out by the protocol.
- bHOME- The first of many Stable+ Coins. They are receipts for money pooled into Pans that represent the amount loaned + interest.
- Eggs- Non-fungible Tokens (NFTs) of the homes that that hold specific information and represent real value in the home
- BACON- The governance token of BaconCoin that controls the structure and future of the protocol.
How does it work?
Well we value decentralization, so we had to change the way traditional mortgages are done. We separated mortgages into two different pieces that are normally together:
- The right to a piece of the value of a house, known as a lien
- A loan (and agreement to repay the loan) associated with the lien
Typically, the lien represents the loan on the property. Now, by separating the two, you can have a lien on the property without technically having a loan (yet). You can now minimize the “real-world” legal contract interaction, and everything that is not physically required moves onto the blockchain. This gives you more flexibility into the types of loans and opens the door to what we like to call smart loans.
Here’s how smart loans work for people who own a home:
- You decide you would like to take out some cash against your home
- You enter your name and address
- An approved servicer (like Loansnap) calculates how much your home is worth and verifies any existing loans on the home
- The servicer shows you the value and lets you decide how much you would like to borrow against the home
- As quickly as one or two days you can sign a Smart Loan agreement
- The servicer mints an NFT, known as an Egg, and sends it to your wallet
- You put your egg into a Pan and receive USDC (opening up your loan)
- You make your payments to the Bacon Protocol paying off your loan
We’re Changing Mortgages For Good
Not only are we innovating a category (mortgages) that has barely changed in the last 100 years, but BaconCoin is opening the door to incredible opportunities and benefits for investors of all levels.
Open access and competition for loan origination will lower interest rates, meaning your payments will be lower!
No more predatory reverse mortgages; smart loan agreements give you up to 75% credit of the value of homes without needing to refinance your home.
Investors can diversify their crypto profits into safer investments while giving them access to the same financial instruments used by banks, governments and institutions to preserve wealth.
Faster, cheaper, and more flexible funding vehicles for homes.
And, bHOME is just the start– we can grow into any form of real estate (residential, commercial, industrial, retail, mixed-use etc.)
Bringing Home the Bacon
DeFi was created with a promise of new, innovative, open-source, permissionless, composable, and decentralized access to a variety of investment opportunities– and we’re delivering on the promise.
Opening the world to real estate diversification within a volatile asset class is the step in the direction the industry has been desperately waiting for, and we’ve built the application to unlock an incredible number of tools and resources that will help thousands of people across the world.
Want to learn more about BaconCoin? Check out our website.
Ready to help build a better, fairer, real estate system? Mint some bHOME today!