What I am saying is that we allow them to use as collateral.
1. They use X amount of XPY as collateral and a virtual lock goes to those XPY in their wallet. (we don't hold their wallet, these are at third parties)
2. They get a loan.
3. They pay back and get their wallet unlocked.
They don't pay, their XPY gets sold and given to the Investor.
We never get their XPY unless they don't pay.We hope we never get to that.
We will do the same with BTC Mining Contracts and some BTC Exchanges.
Just as when you mortgage your home/
Right. What if value of xpy suddenly tanks while the borrower has btc on loan?
Good question.
If the value goes down the borrower still responsible of paying back the investors. If you get a loan for a new business and the business goes down you will still need to pay the loan.
What we are doing is minimizing the risk for those putting BTC, not eliminating it. Still better that just trust based loans.