Mar 31, 2021
Collateral — AMA Summary
On Tuesday March 23rd, the DuckDAO community had an AMA with the CEO of Collateral, Chris Longden.
“Spend. Anytime. Anyplace. Anywhere.”
Collateral is a payment gateway accessed through an interoperable crypto wallet, granting access to spending power by using crypto as collateral at the point of sale. Users are able to pay for goods and services instantly by using their crypto as collateral against payments at the point of sale.
Platform features
Collateral Pay
Allows users to spend their crypto instantly whilst retaining ownership — simply access the Collateral wallet and securely and safely lock it into a smart contract as collateral. The assets are released back to the user when they repay what has been spent.
Collateral Loan
This feature allows users to buy from a merchant that does not accept Collateral Pay. A Collateral loan can be taken out whilst ownership of appreciating crypto assets is retained. Collateral will offer the lowest collateral to value (CTV) in the market with the lowest interest rates.
Collateral Save
Enjoy an additional income stream with Collateral Save. Up to 60% APY is offered to users through staking of crypto assets in smart contract lending pools, which are in turn lent out to Collateral Pay and Collateral Loan customers. Crypto assets are stored in over collateralized smart contracts, so the amount lent is always covered by at least 150% of the value of crypto held in those smart contracts and constantly monitored by a price oracle algorithm.
Collateral Govern
Collateral Govern tokens will be available through the staking of Collateral tokens and be fully distributed within 12 months of launch. Token holders will be able to influence decisions and help to build the ecosystem together.
Helpful Links:
Participants:
Collateral — Chris Longden — CEO
DuckDAO — Pep — DuckDAO community representative
Please note that the following summary has been edited for clarity.
Pep
Welcome everyone to another DuckDAO AMA.
We are joined today by the CEO of Collateral — Chris Longden.
On behalf of the DuckDAO community, I’d like to welcome you to our channel :)
👋
Chris
Hi everyone — Great to be here!!
Pep
So excited to have you here
Before we get started with everything Chris I wanted to remind our community that there will be a Live Drawing for the AMA winners ….make sure you stay tuned towards the end!
It’s a Duck First…so this will be fun to watch!
Chris
Yes that’s right — we thought we do something different and do a live draw in front of the community — by way of being transparent 👊
Pep
Awesome…you guys could be setting up a trend 😎
Alright, let’s get this party started!!!
Chris
That sounds like a plan guys!
Pep
Can we start with an introduction for yourself; what is your background/experience both in the traditional space, and crypto space.
Chris
Of course. So I am Chris Longden CEO & Founder of Collateral
Before I go any further just want to thank Duckdao for organizing this AMA and their ongoing fantastic support. Also to you the community for supporting us at Collateral and taking part in today’s AMA, it’s both a privilege and exciting.
Pep
😘 Thanks Chris!
Chris
So I am from a more traditional CEFI finance background. I have worked in the banking and payment services sector for most of my working life. Its with this experience I am now looking to bridge the gap between CEFI and DEFI.
I am a huge crypto fan at heart and feel that there is no better time to be alive than right now, given the development and speed of tech. Crypto assets and DeFi are giving us the power to make our own choices
In terms of Crypto experience I personally have been involved in the space since early 2017. I would not call myself an OG by any stretch of the imagination however I have experienced the highs and lows the market can bring. I personally see these as fluctuations to a greater goal and a long term legacy for the project.
😘 I hope that answers your question
Pep
Hey if you survived bear market….you’re an OG in my book!
Chris
Haha 🙂
Pep
Can you tell us how Collateral came about? how it all started?
Chris
Of course I will try and keep it reasonably short…. however it has been in the making/development for some time!
Collateral was born out of a situation I found myself in last year with my long standing school & university friend. We had a really good friend who was in crypto in 2017 and had backed some great projects and made some really good investments.
As we do here in the UK we were having a chat in the pub 🙂 and my friend was talking about wanting to purchase a new car.
However he was such a deep crypto believer he did not want to sell any of his beloved crypto (He is a massive ETH fan for reference)
Pep
Smart man
Chris
So my partner and I offered to lend him the FIAT (£) in this instance. He purchased the car and we held onto a proportion of his crypto in return as Collateral…
You see where this is going…. 🙂
Pep
Ah -ha… he offered you collateral 😎
Chris
At the time BTC was approx $8000. He did not sell it, we leveraged it for him and in return he got his car. We all now know the rest of the story — his BTC is now worth approx $60k. He paid us back plus a friendly rate of interest, paid off the car and still had the appreciation of his ETH/BTC.
Great deal everyone was happy. It was from there we discussed why can’t this be done for everyday smaller items, trainers, clothes etc… and with that Collateral was born.
Pep
Amazing how ideas are born….just gotta pay attention and recognize the need
Chris
Yep indeed!!
With my CEFI and payments experience we went to task on creating Collateral Protocol 😎.
Or go to the pub more often
Pep
Brilliant! it’s not just the right space/time…it was also the right people that were able to recognize the need!
Chris
Exactly maybe I can just jump in there with something about the point above? As it’s really important to me.
Pep
Please do!
Chris
The RIGHT people are vital for everything from top to bottom to make Collateral a success, from the amazing support and advice the DuckDao management team right through to the developers, designers, coders etc…. Also without the community would be nowhere — so a huge thanks to you guys!!
Pep
You will soon see how strong our community is…we move mountains
Chris
I can see that 👊
Pep
No worries! We love the honesty!
We have a ton of great questions so let’s get started
First up: What is the merchant/retailer onboarding process? If I am a small business owner, how easy is it for me to integrate with the Collateral platform and start accepting payments from Collateral Pay users?
Do you have a few big-name retailers lined up already that you can talk about or is this still confidential?
Chris
Great question!
I can see in chat rooms, telegram etc… people are making assumptions on how this is to be done. However for the avoidance of any doubt our onboarding strategy for merchants is two fold.
- We are in discussions with a number of well known payment service providers who are looking to roll out our Collateral Protocol to their existing customers.
- For the smaller business owners, they can download the Collateral Merchant App from the App store and start accepting payment straight away after completing KYC and linking their business bank accounts.
“We are in discussions with a number of well known payment service providers who are looking to roll out our Collateral Protocol to their existing customers.”
We are not looking to compete with the likes of Visa etc… We are offering something unique and different. We want to exist alongside these established outfits but compliment them with an additional service for both users (crypto holders) and merchants accessing a new type of customer.
Pep
Ok thanks for that clarification.
Chris
Hope that answers the question
Before you ask I can’t mention the service providers yet…
Pep
Can you explain how Collateral manages conversions and handles the tax situation involved in trading cryptocurrencies? Will there be appropriate system record-keeping so users from multiple tax jurisdictions can report accurately?
Chris
Ok let me digest a second.
As no trading/ selling of currencies is taking place there are no capital gains taxes associated with using Collateral Pay. The users are simply locking their cryptocurrencies in smart contracts and payments are made directly to merchants for goods and services. The users receive their cryptocurrencies back after repaying the money paid to the merchant plus the arranged interest. As no cryptocurrencies are being sold there are no CGT liabilities.
It works in a similar way to Nexo (tax wise) which has done great things in the Crypto space. However we obviously have a point of difference — hopefully something to relate too.
Pep
Yes Nexo has been awesome…I actually thought of them when I was researching you
Chris
Cool — I really admire what they have done
Pep
Are there any potential plans to implement a collateral card, so even if a merchant is not participating, we can still pay using the Collateral card?
Chris
We have seen cards come and go since 2017 like Tenx. Not sure if everyone knows of that one. It’s something we have discussed however you are open to centralized systems. We are not ruling this out, however. From launch, the focus will be via the APP and QR code for merchants and users.
I think that will keep us busy enough!
Pep
I’m sure!
To what extent is the Collateral service more beneficial and competitive for the merchants, in comparison to traditional services like Mastercard or Visa?
Chris
The Collateral service will allow holders of crypto to borrow against their assets. This is obviously something that Visa and Mastercard don’t offer. Therefore it is a whole new customer base that opens up for the merchants. As our users are HODLERS who do not want to sell their crypto for regret and fear of missing out on the future rise of cryptocurrencies.
Pep
True. I think we will have even more believers after this run so this is a great option for them.
Chris
Yes we think so. Given the backing we have had from DuckDao and the number of VCs behind the project we truly believe in the words of Ran Neuner (CNBC) — this is a game changer
Pep
100%. On a personal level I myself will be looking into your services
Chris
That’s great to hear. As we speak to VCs and people in the space this is a service everyone wants to see. We hope the community today are also in agreement 🙂
Pep
You mention Hacken and Techrate as being involved in the audit process of Collateral. Security is and will always be a hot topic for DeFi, so can you please expand on the security and fund protection mechanisms of your platform? Wallet security/Insurance etc.
Chris
Yes as you say, security is a massive thing for Collateral and something we take extremely seriously.
Users need to have the piece of mind that their assets are safe and fully protected. That is why we have carried out the audit with Hacken, Techrate and ahead of the TGE this is going to be audited a third time by another audit provider. We have protection mechanisms for monitoring funds through our development with the Chainlink oracle.
I have just been told from the otherside of the office… we are appointing Zokyo to complete the third audit!
Chris
You heard that here first… 🙂
Pep
Oh nice!
What oracle service is being used in Collateral Save to keep the lent amount overcollateralized at all times ?
Chris
Again we are working with Chainlink on this solution
TBH — I tend to leave a lot to the tech team on this side. I have a team I know and can trust, which is vital for our success.
Pep
That works well… I once read “hire a bunch of super smart people and then get out of their way”.
Chris
That is exactly how I run the business!! You can’t know everything and [there are] not enough hours in the day. My personal outlook is to find people you can trust, work hard and finally have a drive and passion for the project
Pep
👍🏼
When someone uses your platform for purchasing against the coins they have staked, is the loaned amount for purchase locked in at the cost of the staked/purchased coins at the time or will the amount fluctuate along with the coin(s) the loan was taken out against?
Example would be the borrower takes out 1 ETH worth of a loan for a purchase. At the time ETH was valued at $1800. Would the borrower have to pay the $1800 value OR the 1 ETH they purchased in the loan? We all know crypto is susceptible to wild swings and in moments ETH (or whatever coin was used) could lose or gain 50%
Chris
Again quite a long question let me just have a read — all good though 🙂
The best way to explain would be with an example.
Please note generic figures just to give an overall / high level view.
Lets say the price of ETH is $2000. If you were in a store and wanted to purchase something worth $1000 you would be required to lock in a smart contract collateral in ETH worth $2000, so effectively we would pay for your $1000 item after you locked 1 ETH in collateral.
Lets then say ETH went to $4000, you would still be entitled to claim 1 ETH after repaying the $1000 that was used to purchase your item. This can be done by repaying the $1000 in tether or you could choose the option to receive 0.75 of ETH back from the smart contract and use the 0.25 ETH equivalent to $1000 as your payment back to us to release your collateral.
The alternative to using Collateral is Sell your 0.5 ETH to buy the item for $1000, where you would be liable to capital gains tax. You no longer own that ETH and will miss out on any future appreciation of ETH.
Also as we may have all experienced, not only the CGT from withdrawing the crypto but also the time and fees from taking it from Binance (and other exchange) then to coinbase then to your bank account
Pep
This is the part that’s most attractive to me. Not having to deal with capital gains taxes and still being able to utilize your gains for the real world.
Chris
Exactly!!
Pep
Yeah, it’s so hard for me to control my excitement during some AMA’s because I see the vision/use case in a practical form. This project has got me!
Chris
That’s great to hear. I am not sure if the community have seen — but check out our twitter and telegram for announcements. We have some of the largest VCs in the Crypto space supporting us. It’s because people can relate to this — it’s not another DEX or something like that. This is a project with a real need and use case
Pep
Exactly… it’s relatable and practical ❤️❤️
In my country (Russia), It is forbidden to use cryptocurrency as a payment for goods or services. If I pay someone, but the seller will receive fiat (converted), will it be possible to carry out transactions in this way?
What is/are your plans to expand in countries where the attitude to cryptocurrencies is negative?
Chris
Just from a personal perspective in response to the last part.. countries that have a negative attitude to Crypto — will ultimately get left behind in my view. However, that aside…
Yes, when you pay for goods using the Collateral app, the necessary amount of crypto assets gets locked in a smart contract and the merchants get paid in their native currency. In this case that would be Rubles.
When you pay for products using the Collateral app, it is Collateral that makes the end payment to the merchants. It is not a payment that goes through your bank. This means that paying with the Collateral is acceptable wherever in the world you are, even those with a negative view to cryptocurrency.
You must remember you are never selling your cryptocurrency; you are only taking a loan against it with the Collateral Pay option.
“You must remember you are never selling your cryptocurrency; you are only taking a loan against it with the Collateral Pay option.”
Pep
I see that stable coins are mentioned in your paper for staking in the platform. Of the stable coins out there, what ones are you planning on allowing stakers to put up for collateral? Is there a future plan for alt coins?
Chris
To begin with — We will accept the more popular of the stablecoins — USDT, USDC, DAI, TUSD, PAX and BUSD
We also plan to allow for some of the larger coins as staking options too… These are BTC, ETH, XRP, BCH, LINK to name a few.
With regards to ALT coins we can see this happening in the future subject to extensive review of course. Also this would have to be decided by the holders of the Collateral (COLL) Governance tokens.
Pep
Gre! This helps to keep the community engaged.
Sounds like the popular ones are covered so it’s a nice variety.
Chris
We will operate a truly decentralized business and Coll holders will shape the business and protocol
Pep
Ok last question I have from the prepared twitter questions:
What is the interest rate of Collateral Loan? If someone accepts the instant loan, what will he/she pay in return?
Chris
We operate a loan model style similar to that of Nexo. Loans rates start from 5% as a guide. However we will reward COLL token holders and Hodlers. With the more tokens you hold the user will have access to lower potential rates of interest offered.
In terms of repayment the user will repay the balance which will be made up of the capital advanced plus any interest additional costs. Interest costs are calculated on a daily basis.
5% per annum — just to clear up any doubt. Sorry my fingers are hurting 😂
Pep
Lol we should start doing voice ama’s
Chris
Haha I have a few of those coming up this week
Pep
Ok thanks for the answers to all the prepared questions. We will now un-mute our chat for the telegram community. After that we will mute again and you can select a few to respond to
Just a reminder after the tg community questions we will do the live drawing for the AMA winners
Chris
Thanks for organising and hosting
Hi guys thanks so much for all the interest and great questions
I have selected two questions as I know time is tight. However feel free to join us at Telegram and twitter to join the community.
Question — How will the demand for your token increase in the future? What steps would you take to increase the demand?
Answer — The merchants will be charged fees for use of the Collateral protocol. These fees charged to merchants and payment services providers will be where collateral earns it money, in a traditional sense. A proportion of these funds will then be sent back to the Collateral token holders similar to a traditional dividend.
Nexo offers this for point of reference. The Governance holders will also vote on this as this may be used (subject to vote and agreement) to burn tokens which will decrease the amount of token in circulation and increase the price- due to supply and demand. Also tokens will be locked as savers will receive attractive APY rates this will decrease the supply.
Finally users and borrowers will use the token to access lower Collateral loans to value options and lower interest rates. So all stakeholders involved in the ecosystem require or have the need for keeping and accessing tokens.
Question — COLL is the local utility token of the Collateral ecosystem. How do $COLL holders take advantage of impressive staking APYs and how much of their share of merchant fees and fees from COLLs sold? Can $COLL tokens also be used for platform governance?
Answer — On the same day as our TGE we will be launching staking contracts where holders of $COLL tokens can stake them for attractive APY’s and earn $COLLG — the governance token of Collateral. We will also have a UNI V2 LP token where you can provide liquidity and receive $COLL as a reward again with very attractive APY’s.
All $COLL token holders will share in the fees generated by merchants for using the Collateral Payment Gateway.
The $COLLG tokens earned from staking $COLL from launch day will be used to make votes on how the ecosystem is run, you will be able to propose motions and vote on them too. Maybe you want to propose a motion to add an Alt Coin to be used as Collateral.
Pep
Ok sure…let me post the link to the live drawing for the AMA winners
Also just for the community, make sure you join their announcements channel
Collateral Defi
Lots of announcements coming this week!!
Pep
We will be paying attention!
Can you post the link for the drawing please?
this should be fun!
Collateral Defi
Hi everyone this is the moment you have all been waiting for
The live draw for the lottery winners
Chris
Good luck to everyone!!!!
Pep
This was very cool and congrats to the winners!
I know you’re in a time crunch so we can wrap up the AMA
Chris
Thanks
Collateral Defi
Winners:
$100 in allocation for @aanmaulana1805
$200 in allocation for @hcore
$400 in allocation for @Hodlandprosper
Collateral Defi
Congratulations! We will be in contact with you shortly through telegram.
Pep
Thank you so much for your time Chris . This was a fantastic AMA and I’m very much looking forward to your launch.
Much success in your future!!!
Chris
Thanks so much everyone for being part of AMA
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