Teller Facilitates First Uncollateralized DeFi Mortgage On Austin Apartment

Table of Contents

• First Uncollateralized DeFi Mortgage Loan 
• Combining On-Chain Lending And Off-Chain Data 
• How USDC.Homes Works
• Real-World Loans In Crypto 

A homeowner in Texas has heralded the era of on-chain DeFi mortgages after securing a loan in USDC stablecoin over the Polygon network, using nothing but their credit score. The loan was issued by the USDC.homes crypto mortgages platform and facilitated by Teller. 

First Uncollateralized DeFi Mortgage Loan 

USDC.Homes, a company that partners with mortgage lenders and brokers, facilitating home loans, has successfully completed its first sale, thanks to lending protocol Teller. The crypto mortgage platform issued its first loan of $500,000 issued in USDC (USD Coin stablecoin) over the Polygon network. The platform issued the loan through a program that enables crypto holders to take out uncollateralized mortgages based solely on their credit score. 

USDC.Homes combines the best of traditional lending markets, such as determining eligibility through a borrower’s credit score, with Decentralized Finance (DeFi) innovations such as cryptocurrency staking, which helps pay off the loan. Teller is calling the loan the “first unsecured DeFi mortgage” because the borrower did not put up any collateral but secured the loan thanks to his credit score. 

“Today, we’re excited to debut http://USDC.homes and announce the arrival of crypto mortgages to Texas!”

Combining On-Chain Lending And Off-Chain Data 

Crypto mortgages offer a significant advantage for individuals that have significant digital assets. Individuals also are not required to liquidate any of their holdings to purchase a home, helping them avoid taxes on their gains. Traditionally, DeFi loans have required collateral. This means any individual looking to secure a loan in crypto has to deposit a certain amount. This way, if the price of a particular commodity drops, the protocol has the option of cashing out the deposit and avoiding making a loss. 

Teller, on the other hand, specializes in no-collateral lending. It achieves this by combining on-chain lending and off-chain data such as credit scores and reports. Ryan Berkun, CEO, and Founder of Teller commented, 

“It blends the best of both worlds. This innovative mortgage loan market, built on the Teller protocol, integrates a mainstream user experience with the digital asset backend infrastructure of DeFi.”

USDC.Homes is planning to expand to all of Texas and then to the rest of the United States. 

How USDC.Homes Works

The loans are issued in USD; however, borrowers can also make payments in ETH, BTC, and USDC. The platform has been built using Teller’s lending protocol and is backed by the TrueFi project that issues uncollateralized crypto loans. The platform can issue mortgages as large as $5.5 million at an interest rate of 5.5%, requiring only a 20% downpayment. 

The down payment issued to the platform is staked instead of being sold and accrues interest that can be used to pay off loans. In a blog post, Teller stated that the traditional requirement to liquidate crypto assets to secure a loan is detrimental to American borrowers, exposing them to high taxation, fee, and a loss of position. 

Real-World Loans In Crypto 

Issuing loans has become fairly common in the crypto space, with one startup, LoanSnap, which has already issued significant loans in traditional mortgages extending its services to the crypto space after partnering with DeFi lender Bacon Protocol and linking mortgage values to an NFT. 

Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.