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I Borrowed Money From Anchor To Fund My Weekend
There are quite a lot of stories around crypto currency and people getting rich which is what drives probably 90% of people to the sector which is why in my opinion projects without a true sense of direction get selected by many. Nothing is more alluring than fast money except for the fact that it doesn't exist.
As a decentralised journalist my largest portfolio is on the Hive and Leo Finance blockchain and as you can see I really don't hold much. I have been slowly building my Luna stake as well as SYS and Secret (not financial advice).
COVID19 for me has significantly damaged me financially in summary we had a unit which we drew on it's small equity to get a bridging loan to build a home further out. COVID hit, bank pulled it's funding we sold our home, stuck renting, got cash together and started building suffering heavy COVID delays. The entire process is now within it's 3rd year costing me around $AUD100,000 in financial losses which is why I turned to Crypto so I could try and make a side income to help. The majority of my income is going towards paying the mortgage on the land, rent and construction costs.
Trialling Anchor to supplement my income
This week was horrendous for expenditure and with it being summer I really wanted to take the kids out to do something, nothing extravagant or too costly just a really fun weekend. so I decided to trial using Anchor to borrow money to fund my weekend and take the kids out exploring and swimming in the river as I live on the outskirts of Melbourne amongst some really amazing locations.
The Great Mint
I first worked out how much I thought I'd need and as this is in US dollars when I transfer to Australian dollars it is a lot more. I didn't need much just money for petrol, lunch and whatever else might pop up along the way. So I settled on two (2) Luna worth of funds which would give me enough to only borrow 45% of their value (I'll explain more why this amount later)
Now that I have my bLuna it was time to provide it as collateral so that I can borrow UST against it. At the time I did this (day before the crash) I was provided with the ability to borrow a max of 92 UST. The benefit of being Australian is that US$1 is around the $AUD1.40 mark so it is quite a lot.
I submitted my collateral which meant it was time to go borrow against it!
Not Borrowing More than I can lose
Given that at this stage the market was already starting to come down as it is the US tax time and would likely continue to do so I borrowed 69 UST. I do not think Luna will drop below $US58 which is when the protocol will sell my asset to cover the collateral amount. Also if it looks to trend that way I can always add a small amount of bLuna to strengthen my position or pay down some of the debt with some UST which I won't need much, maybe $10 worth.
Now that I have my loan it was time to withdraw it and thankfully this is really easy in Australia it is quick and seamless. I headed over to Coinspot which I hear a lot of people complain about their fees but they are not too bad. Plus all fees charged on Crypto in Australia can be used to offset tax as it is a cost you're incurring.
I use Coinspot because their withdrawl from site to bank account is a few minutes, the most I ever waited was maybe 20 minutes.
Cash Out
I sold my borrowed UST for AUD and it netted me $AUD98.91 which was more than enough for what I needed on this weekend. I was planning on heading to the Werribee Gorge to go for a swim so I only needed cash for fuel and a picnic.
As I have ended up with more than enough I also ducked out to get some charcoal and some meat for a BBQ I will cook tomorrow for dinner.
The Day Out
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So as you can see we had a ball splashing around the river and making new friends too! I only needed $25 in petrol and I still have quite a bit left over for tomorrow. Lil miss enjoyed it so much that she would like to return tomorrow as it will be another hot day. I told her I would take her to a better place where we can also go fishing!
I still have $AUD40 left over that's including stopping to buy a slurpee for me and the kids and I am not too sure what else I will require the rest of the money on. So chances are it will most likely return to Anchor where I can pay down my debt and reclaim my assets.
If not I will slowly pay down the debt and reclaim my assets in time.
Ease of Use and Use Case
I wanted to share this story for a few reasons showing the ease of use and how blockchain is changing the financial system. I could have just as easily called a friend to lend me $100 until pay day or even come up with another activity.
But I wanted to test Anchor out and just from this basic little experiment Bank's are going to have a major issue in the next 5 years time I believe and here is why.
The current Anchor interest rate is 2.31% it would be impossible for me to get a personal loan for that low even a mortgage is not even that low. The average personal loan interest rate in Australia is over 14%. Soon I will need to borrow money from the bank to fund my drive-way and concrete around my home which is estimated to be around $AUD10,000 to $AUD15,000. I will need to re-mortgage my home loan to cover it which is going to cost me a lot in the long run.
I always said that if I made enough cash on Crypto I would sell it all and pay out my mortgage and live mortgage free (houses are expensive in Australia) but I am starting to think that I will set a new financial goal for myself.
That is if I do make enough crypto to cover the cost of my mortgage I won't be selling my assets I will be heading over to Anchor and borrowing the money from Anchor as it is heck of a lot cheaper and I get to retain my assets and my repayments are lower than a mainstream bank.
Also, if something does occur to the crypto and I lose it I don't claim bankruptcy or get a black listing I can simply start again. You also don't lose all your assets in a liquidation, just the part your short of which could mean I only lose part of my asset but the debt is also paid down.
This is next level banking, truly amazing.
Image sources provided supplemented by Canva Pro. This is not financial advice and readers are advised to undertake their own research or seek professional financial services