MELD’s $1 Billion ISPO Focuses on New Cardano Application Cases and Crypto Financing

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MELD's $1 Billion ISPO Focuses on New Cardano Application Cases and Crypto Financing

MELD’s first-ever initial stake pool offering, which ended on Oct. 27, attracted approximately 40,000 investors who staked nearly 620 million ADA.

DeFi is a financial protocol that was developed by DeFi. MELD recently made news for bringing more than $1 billion in staked Cardano (ADA) to its protocol using a novel funding mechanism known as an initial stake pool offering, or ISPO, signaling a significant shift in how early adopters fund blockchain firms.

MELD CEO Ken Olling spoke with Cointelegraph about the relevance of the ISPO as well as Cardano’s role in facilitating widespread participation in the stake pools.

An overview of the ISPO

The ISPO is an innovative approach for early adopters and investors to promote a project by transferring cryptocurrency to public stake pools in exchange for project tokens. Despite the fact that the concept had been offered elsewhere, MELD is currently the only known project to use an ISPO.

The MELD ISPO, which began on July 1, allowed Cardano users to stake their ADA for any length of time and in any amount in exchange for MELD tokens. After around $100 million in ADA was given, the first stake pool was full in less than 24 hours. Four stake pools totaling approximately $200 million were filled in less than five days.

The ISPO was a significant departure from previous crypto funding initiatives, most notably the initial coin offering (ICO) and security token offering (STO), and was a nod to Cardano’s growing ecosystem. It also highlighted pent-up demand in the market for DeFi projects, which continue to pique investors’ interest.

Blockchain projects raised billions of dollars in funding in 2017 and 2018 before regulatory crackdowns and a brutal crypto bear market put an end to the mania. Source: 3TS Capital

What’s the deal with Cardano?

MELD chose Cardano for its ISPO over all other proof-of-stake (PoS) chains because of its cheaper transaction costs, appealing staking mechanism, and overall architecture, according to CEO Ken Olling. Cardano was seen as the greatest option during MELD’s initial development phase in mid-2020, given the conditions surrounding Ethereum (ETH) at the time.

“There aren’t any more established blockchains,” Olling told Cointelegraph, adding:

“One of our requirements was a modern PoS blockchain. The only real option at the time was Cardano. You have Solana, which has a two-tiered, much more complex staking mechanic in regards to the blockchain. It also operates legally in a different way. And then you have other PoS blockchains, but none of them really provided the full picture or the full package.”

Despite its recent challenges, Olling said his business remains “extremely enthusiastic” on Cardano’s future. After being one of the top performers in the crypto market through September, ADA’s performance has slowed significantly in recent months.

Increasing your financial efficiency

MELD is a non-custodial banking platform that allows users to lend and borrow with crypto and fiat currencies while also earning interest on their MELD tokens. On the site, lenders can deposit both cryptocurrency and fiat currency. After posting their crypto as collateral, borrowers can borrow in both sorts of assets.

For investors, the crypto collateral option is appealing since it allows them to borrow fiat to cover their bills without having to sell their digital assets and pay a capital gains tax. (Capital gains taxes are a source of consternation for cryptocurrency investors, with large bag holders always looking for ways to use their newfound wealth in the most efficient way possible.)

When asked about what differentiates MELD from other crypto lending and borrowing platforms, Olling identified two factors: first, “on the highest level, we offer transparency,” he said. “It’s on the blockchain, so what happens with funds on the protocol is completely open-sourced, unlike centralized crypto lending and borrowing services.”

Secondly, and on a more practical level, MELD offers “users fiat currencies for their crypto-backed loans, whereas other […] DeFi competitors can only offer other cryptocurrencies.”

Cryptocurrency lending has been one of the most popular use cases in DeFi, with companies like Aave and Compound achieving total value locked (TVL) of over $14 billion and $11 billion, respectively. According to industry estimates, more than a half-dozen more protocols have a TVL of at least $100 million.

Despite the fact that the rise of DeFi has posed a threat to the old financial system, the industry’s growth has been fueled mostly by consumers who already have access to legacy banking institutions. That appears to be changing, as crypto entrepreneurs seek to provide financial inclusion to the world’s huge unbanked and underbanked populations. Financial inclusion, according to Olling, is a byproduct of a more efficient financial system made possible by DeFi.

Source: Coin Telegraph

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