What Is Meld? A New Smart Way To Borrow Fiat With Crypto in 2022


What Is Meld?

MELD is a decentralized and trustless lending technology that operates on the Cardano Blockchain and incorporates smart contracts. It is regulated by the MELD token, which is a cryptocurrency. It offers a collection of tools that allow anybody to lend and borrow cryptocurrency and fiat monies in a quick, secure, and transparent manner.

MELD loans fiat cash given by lenders to borrowers who use cryptocurrencies as collateral in a smart contract to secure the loan. The lender earns a high interest rate on their secured assets, while the borrower may keep their crypto holdings and watch them increase at an average yearly rate of 32 percent (BTC is growing at a pace of 196 percent) compound annual growth rate (Compound Annual Growth Rate).

In order to generate yield, MELD stakes the collateral in community-managed Vaults (LPs), with 40 percent of the income going to stakers and the remaining 60 percent going to various additional services such as products development, treasury, development, and operations.

What Is Meld? A Smart Way To Borrow Fiat With Crypto 2022
Source: Meld

Fiat Liquidity Lending

Money liquidity providers lend fiat to the MELD protocol, which is administered by the MELDapp, in exchange for high interest rates. There are a variety of sources for the yields on lending fiat on MELD, including interest paid by the borrower, trading fees APY from the Vaults of MELDed assets, and protocol awards.

Crypto Collateral

Money liquidity providers lend fiat to the MELD protocol, which is administered by the MELDapp, in exchange for high interest rates. There are a variety of sources for the yields on lending fiat on MELD, including interest paid by the borrower, trading fees APY from the Vaults of MELDed assets, and protocol awards.

Fiat Borrowing

Two types of fiat borrowing services will be offered by MELD: crypto-backed loans and a line of credit.
From the standpoint of collateral, both services perform in a comparable manner.

To use either service, a borrower will be required to deposit two times the amount of money they want to borrow in fiat currency.

In exchange for crypto-backed loans, borrowers get fiat cash in the form of a wire transfer straight into their bank account, or they may obtain a line of credit via the MELD debit card after depositing their cryptocurrency.

MELD Vaults (Liquidity Pools)

The MELD protocol operates single-sided MELD/Token liquidity pools, which are managed by the MELD protocol.

Any cryptocurrency deposits made by users are tied to a smart contract and deposited in the appropriate MELD/Token pool.

The advantage of this is that the deposited cryptocurrency may be exposed to trading fees and annual percentage yields (APY) from external DEX aggregators and routers. For crypto depositors, the MELD protocol has built-in temporary loss prevention that is included into the protocol.

The MELD Token

The MELD token offers the bearer with a number of useful functions that may be used in many situations. First and foremost, there is the problem of MELD being used to pay for certain transactions on the protocol. 

As a second option, users may stake MELD and get APY as a reward via the protocol. In the case of the MELD protocol, the staking pool serves as an insurance solution. The staking pool provides protection against protocol difficulties that may develop as well as against temporary loss of funds in the MELD Vault system.

The annual percentage yield (APY) for staking is derived from 40 percent of total protocol fees, which include MELDed assets and trading costs.

Loan Repayment

MELD provides crypto depositors with loans secured by cryptocurrency as well as a line of credit.

Borrowers of fiat money using these services are required to repay the principal and interest on a monthly basis until the debt is completely repaid.

Crypto Collateral Returned

When the loan is repaid, the crypto collateral is unlocked and transferred from the relevant liquidity pool to the user’s wallet, and the smart contract is fulfilled.

Fiat Liquidity Returned

At any time, fiat liquidity providers can withdraw their money. If a crypto-backed fiat
loan position suffers a liquidation event, then a sale takes place of the underlying
crypto asset and the proceeds transferred to fiat to ensure the fiat lender does not
suffer any losses.

Core Smart Contracts

Lending Contract

A lender may deposit fiat into the MELD Foundation’s fiat liquidity pool using the MELD App, which works in conjunction with a wire transfer. Following confirmation, the Foundation will make the necessary changes to its on-chain script to keep track of the investment. Early lenders will be eligible for a limited amount of treasury MELD as a reward.

The lender may be able to recover the comparable amount of his or her fiat investment via the loan contract. The smart contract on the blockchain will maintain track of all of the investments. If the lender receives the fiat returned too soon, he or she may be charged a fee.

Borrowing Contract

A user may deposit Cardano native tokens (including MELDed assets) into a borrowing contract, which will result in the creation of an on-chain Collateral Deposit Position (CDP).

The smart contract is activated after this contract has been confirmed by both parties. Once the protocol has made contact with the bank account, it begins the process of transferring funds from the fiat liquidity pool to the borrower’s bank account in fiat. In addition, paperwork for the borrower’s jurisdiction will be generated by the contract. In exchange for participating in the protocol, MELD incentives will be sent to the borrower’s MELDapp wallet.

  • The MELD Foundation may communicate with the CDP in accordance with the following rules:
    Make use of the CDP in MELD vaults to increase yield farming efficiency.
  • The collateral will be withheld and returned to the borrower after the loan is completely repaid, or when the borrower’s request is approved by the lender.
  • The borrower defaults on the loan or the collateral ratio exceeds the permissible level, and the position is liquidated in whole. The borrower may also request that a part of the collateral be liquidated.

Borrowers may increase the amount of collateral they deposit into their CDP via the borrowing contract, increasing the collateral ratio and preventing liquidation.

They may also withdraw collateral if the CDP’s collateral ratio permits it, although doing so would lower future payouts and may result in protocol costs. If this is not the case, no one can interact with the CDP or its locked settings.

What Is Meld? A Smart Way To Borrow Fiat With Crypto 2022
Source: Meld

Vault Contract

This contract allows multiple agents to supply crypto liquidity to yield farms in exchange for a share of the swap costs.

The contract, which maintains account of all investments and may be used to divide rewards and authenticate liquidity withdrawals from providers, can also be used by Cardano agents to make swaps.

Staking Contract

A protocol user may stake MELD tokens in order to gain protocol incentives via the usage of the staking contract. The MELD tokens that have been staked are utilized to offer insurance against collateral liquidation and LP impermanent loss, among other things. Users have the option to unstake at any moment under the terms of the contract.

Governance Contract

This contract regulates the parameters of the protocol as well as the proposals that alter them.

This contract allows MELD holders to pay a nominal charge to open ideas that MELD stakeholder may vote on via the process of this contract. When the voting period comes to a conclusion, a proposal is rejected if it does not get the requisite minimum number of participants and yes votes by the deadline. 

If the proposal is approved, the MELD DAO will begin the process of preparing and implementing the plan.

Fiat Contract

Using the fiat oracle contract, an oracle may change the real-time price of relevant assets on the protocol, which is beneficial to both parties. This is required in order to keep the collateral ratio of CDPs up to date.

Security Contract

An oracle contract allows an oracle to update the real-time price of important assets on the protocol via the use of a smart contract. This is required in order to keep the collateral ratio of CDPs up to date.

MELD Vaults

The MELD archives are LPs that are open to the public. The LPs are single-sided, which means that liquidity is provided by a single token rather than in pairs. The second side of the LPs comes from the protocol, which is responsible for minting MELD tokens of equal value.

MELD tokens are present on one side of the pair in all MELD vaults. This arrangement enables them to change between any combination of pairings that are accessible across all vaults at any point in time.

The LPs are required by the protocol in order to generate reward flows for its agents. The primary design objectives are to simplify the complexity of smart contracts, to eliminate temporary loss, and to promote convenience.

MELD will begin with a modest number of deep pools to ensure a high degree of liquidity and stability at the time of debut. Our LPs are decomposable and may be used by a variety of protocols and agents without modification.

Staking the MELD Token

Staking chances are also provided by the system, which makes use of the MELD token.

It is possible to commit MELD Tokens in exchange for MELD Yield depending on the performance of the protocol as a whole by participating in the staking pool.

The staking pool is a kind of insurance that is paid by users who stake their MELD tokens. This pool offers protection against possible liquidity shortages in the case of a black swan occurrence, as well as against temporary loss for liquidity providers in general.

Protocol fees provide incentives for the stakers, who in turn earn rewards from the protocol.


An oracle is a reliable source of information (for example, a data feed) that provides smart contracts with the knowledge they need to carry out an action.

Oracles can keep track of the price of an asset and make predictions about how the item will perform in the future. Oracles have the benefit of allowing smart contracts to perform actions depending on external events, which is a significant advantage over other types of contracts (such as a bank transfer). In order for crypto-backed loans to work properly, this is a critical part of their design.

User loan to value ratios, liquidation events, and notification events for users will all be determined by MELD using oracle technology, which will be used to fetch the price of the unwrapped versions of MELDed assets in order to determine various protocol parameters such as user loan to value ratios, liquidation events, and notification events for users.

Additionally, the MELD oracles serve as a link between the blockchain and fiat accounts, allowing for the transfer and receipt of fiat payments as part of the lending and borrowing process.

Market Analytics

MELD makes use of oracle technology in order to communicate the information acquired from market research to the different portions of the protocol that need it. Smart contracts, alerts, the display of loan safety levels, and methods to hedge against the volatility of cryptocurrency assets are all included.

Using market analytics, Market Analytics seeks to offer tools to assist MELD users in the management and servicing of their loans. It contributes to the investigation of the crypto-economy and the creation of tools to aid in the market-based development of the MELD token.

This is a very essential feature of the MELD protocol, since it has the potential to deliver great benefit to users of the protocol. It is vital to monitor the market and give the finest available tools for analysis in order to deliver the greatest possible experience for all consumers. These include both keeping track of the present worth of crypto assets and the value of those assets at any point in time in the past.

Loan Safety Levels

Meld’s oracles give their customers with real-time information on their loan-to-value (LTV) ratio, which is the relationship between the amount of the loan and the value of the underlying asset in question.

It is possible that the borrower may use this information as a decision-making tool to evaluate whether or not to repay the loan, or whether or not to seek further collateral from the lender.

It is possible that the borrower may use this information as a decision-making tool to evaluate whether or not to repay the loan, or whether or not to seek further collateral from the lender.

Users of crypto-backed loans have the option of withdrawing currency (USD or EUR) up to 50% of the value contained inside the crypto assets that were placed as collateral. This corresponds to an LTV ratio of 50 percent. When a user’s LTV hits 85 percent, a liquidation event will take place on his or her account. 

A margin call happens if the value of the collateral falls below the LTV of 65 percent or if it remains over the LTV of 50 percent for more than three days. The user is notified of the margin call. 

Customers must supply liquidity to minimize the LTV if it exceeds 75% or is over 65% for more than 3 days, whichever is the greater. Using their oracles, they are able to do all of these functions.


When a risk oracle is implemented into the MELD protocol, it incorporates hedging measures to help limit market volatility. The purpose is to reduce the number of liquidations that are carried out during periods of significant cryptocurrency price volatility.

Price turbulence in the cryptocurrency market is on the horizon. For example, on May 17, 2021, the cryptocurrency market saw a total of $2.4 billion in crypto liquidations.

Within a 12-hour period, the whole cryptocurrency market saw a precipitous 66 percent decline, after which it recovered half of its losses in the next 12-hour period. If the comeback occurs within such a short period of time, the user should not face liquidation of their position on the market.

These are the kind of situations in which their risk model will establish a grace period for loan participants, integrating their treasury funds to balance any liquidations that may have happened during this brief period of time.

Fiat Liquidity


Establishing the MELDapp account is the first step for fiat liquidity providers. In order to supply fiat money (in the form of USD and EUR), all fiat liquidity providers must pass the KYC/AML process. Following successful completion of the KYC, the liquidity provider will be provided with bank account information to which money may be sent. 

The MELDapp will display a message confirming the receipt of payments.
The liquidity provider has the option of applying cash to loans or to MELD vaults, depending on their needs. 

Each of these alternatives has a separate set of terms and a different yield. Withdrawals are permitted at any time, unless otherwise specified by the liquidity provider in advance.

The blockchain keeps track of every activity that takes place throughout the liquidity financing process, and it can be audited at any moment, either via the MELDapp or by an independent third party.

Fiat Borrowing

Loan Origination

The MELDapp is the platform from which loans are created. Users must first create an account and choose a collateral financing option before proceeding.

When taking out a fiat loan, users merely need to complete the Know Your Customer (KYC) process. As soon as the KYC process is completed, users can begin applying their collateral to a CDP.

Loan Jurisdiction

Once the loan conditions have been agreed upon, the user must choose the jurisdiction in which the money will be sent.

This, in turn, may have an impact on various loan characteristics that are dependent on the usury rules of the jurisdiction.

In addition, there may be particular usury laws or licenses that the MELD Foundation will be required to obtain.

MELDapp Account

Wallet Creation

The MELD software, which can be downloaded from the iOS and Android app stores as phone applications or from the Google Chrome web store as a browser extension, has a feature that allows you to create a wallet from scratch.

The creation of a wallet is completely free. It takes less than 5 minutes to complete the process. Users who want to take advantage of any of the loan offers made available by the MELD protocol will be required to comply with KYC/AML processes during the wallet creation setup.

Loan Creation

The MELDapp, together with the establishment of a wallet and completion of all relevant KYC/AML processes, allows users to begin using the MELD protocol, which includes the production of crypto-backed loans. Users may deposit their crypto assets directly into the MELDapp from this page, allowing them to get the MELDed version of the asset.
It is necessary to wrap deposited crypto assets in order for them to be suitable as collateral for a crypto-backed loan or line of credit, according to the protocol.

Once a deposit has been made, the user will be able to withdraw up to 50% of the value of the underlying crypto asset in either fiat or credit. In the case of a loan, the fiat receipt is received by a wire transfer immediately into the user’s account. In terms of the line of credit, customers may access the available fiat from the deposited crypto asset by using the MELD debit card.

Loan Maintenance

Because of the volatile nature of cryptocurrency assets’ prices, loan maintenance is very important from the user’s standpoint. Users who elect to deposit their cryptocurrency in order to form a collateralized debt position open the door to a slew of additional dangers that might result in the loan being liquidated, requiring the sale of the deposited cryptocurrency asset in order to repay the loan.

To limit the risk of CDPs, it is important to keep track of the price of the underlying crypto asset that has been deposited as well as the LTV ratio. Users may choose to deposit a larger amount of a crypto asset in order to lower their LTV ratio. If, on the other hand, the value of the underlying crypto asset rises in value, the user may be more eager to withdraw more money.

Users who open a CDP are protected by the protocol in certain ways, but the dangers are still there, and maintenance by the user is required to guarantee that the position does not become liquidated.


Stakeholders will get prizes in the form of MELD tokens during the early stages of the MELD protocol launch. An initial stake pool offering (ISPO) will be conducted during these phases to generate money for MELD as well as deliver incentives to stakeholders.

This may be done directly via the MELDapp, as well as through the Yoroi and Daedalus Cardano wallets, respectively.

Participants in the ISPO must delegate ADA to MELD Cardano pools in order to be eligible for MELD incentives. Staking ADA has no upper limit in terms of the quantity that may be done.


According to the protocol, their oracle warns the user if the prediction anticipates a rise in their LTV ratio to levels that are unsustainable. In such a circumstance, the borrower would either make more cryptocurrency contributions or make a partial payback.

As Oracle analyzes and transpiles continuous real-time data, borrowers are notified of changes in their borrowing situations via a notification system. In the case of significant market risk, their oracle gives specifics on the activities that borrowers who are over lending in relation to their existing market position should take.


DeFi systems must be adaptable and have minimal integration barriers to be successful.

A programming interface, known as an application programmable interface (API), is provided to crypto and conventional institutions to allow them to incorporate MELD into their current digital systems. 

Meld’s data model, which is built on GraphQL, ensures that important data from the protocol is continuously available.

In addition, the API makes it simple to use, and the low cost of interactions makes it a universal tool for accessing information inside the protocol.


Protocol Functions

The MELD protocol is building the core DeFi infrastructure on Cardano by offering a
list of services at the heart of Decentralized Finance. Below is a list of the services
and a brief explanation of how they will function:

MELDed Assets

MELD offers infrastructure for wrapping or MELDing assets from other networks in order to have a permissionless version of such assets available on the Cardano blockchain. The following assets are included in the initial scope of those assets, which will subsequently be expanded to include assets from additional chains.

● renBTC


Centralized lending (connected with real-world cash) and decentralized lending are both available via MELD.

What Is Meld? A Smart Way To Borrow Fiat With Crypto 2022
Source: Meld


What Is Meld? A Smart Way To Borrow Fiat With Crypto 2022
Source: Meld

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