Source: Wikipedia
The Bank of Neoxian is an initiative by @Neoxian (from the tribe 'The City of Neoxian') that provides loans with low interests on the blockchain.
If you take a look at his profile, you'll see dozens of different loans that has been given since the old days before the fork.
It's an incredible initiative that shows that a reliable financial institution can exist in the decentralized ecosystem of Hive.
Yesterday, I found out that the Bank of Neoxian has recently given two different loans in which they accepted Splinterlands Cards as Collateral. Here's the first (6 days ago) and here's the second (3 days ago).
Collateral, according to the Invistopedia, is the name of the asset that a lender accepts as security for a loan. The collateral acts as a form of protection for the lender: if the borrower defaults on their loan payments, the lender seize the collateral and sell it to recoup some or all of its losses.
In traditional financial operations, Collateral usually takes form in real estate or some kind of financial asset (like shares or bonds). But, in both those cases, the Collateral was in gaming assets, more especifically Splinterlands cards.
This, obviously, could only become a reality because Splinterlands is blockchain-based, and the in-game assets (like cards) are NFTs that can be traded freely in decentralized marketplaces.
When you read the terms of both loans, it's incredible to see the complexity of the loan operation. This shows, as I said before, the viability of the Blockchain as the future of the financial world. DeFi is actually the future, after all!
The loans are for-profit, so there are interest being paid by the borrower. It's not a "loan agreement between friends", it's an actual business;
There are collaterals (Splinterlands cards) protecting the lender in the case of a default;
These collaterals are assets that can have their value instantly calculated (by checking decentralized markets like Monster-Market or PeakMonsters). While other collaterals can be difficult to be valuated (like real estate), this one have market prices 24/7;
The collaterals are given back to the borrower, using the Delegation function of the Hive Blockchain, allowing these assets to be used by the borrower during the duration of the loan. This is incredibly similar to a mortgage, in the sense that the asset (the real estate) can be used by the borrower (to live inside the house) while the mortgage is being paid. Not only that, but any eventual profits (like SPS Airdrops and vouchers) are also kept by the borrower, again, much like a mortgage (if the borrower wants to rent the mortgaged house, he can keep the rent too).
I'm incredibly excited to see this kind of stuff happening in front of my eyes. As both a Gamer and an Economist, it's remarkable to see that gaming assets are, finally, having their value considered. Players invest time and work while they're playing, and I can't fanthom any reasonable reason to forbid players to freely access and trade their in-game assets, including offering them as collateral on loans or other financial operations.
This is the future, and it's happening in front of our eyes.
Thanks for reading this post, and until next time!
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