Traditional lending extracts value from the borrower through interest structures and origination fees that benefit the lender first, and hedge against the risk of default. Not only this, it also incentivizes the borrower into consumption and debt expansion. The borrower becomes trapped in long debt cycles where they cannot repay early since lenders profit from keeping them in the cycle.
A couple of things I really like about the Strike LOC:
- Bitcoin-collateralized lending removes the intermediary's ability to extract rents through origination fees and information asymmetry. No complex system of credit scores, employment history, income, etc.
- Although this goes against the thesis of "Not your keys, not your coins", small allocations into an LOC allows us to partake in financial tools that are historically gatekept for the wealthy, or designed to turn us into slaves. Strike is transparent and honest about the risks-this is all i want. Manage your LTV, don't be greedy.
- This approach rewards low time preference. It encourages holding and not selling, the direct opposite of fiat's "spend now, borrow more".
- The pawnbroker comparison from
@Hard Money Herald is brilliant. No hidden extraction. Transparent terms. The collateral IS THE AGREEMENT.
- Never selling is the first step toward exit. Never selling means never reentering a system that exploits you through interest, debases your savings through inflation, and requires you to prove your worthiness to participate.
@jack mallers, Thank you for helping us move towards the clearest path for exit. Let's see who walks through the door.
