The peer-to-peer lending phenomenon has since made its way to the ever-growing cryptocurrency scene. That is to say, there are several platforms in the space that match borrowers and investors for cryptocurrency-backed loans. One such provider that I sought to explore further is that of MyConstant.
Not only do investors have the chance to earn up to 7% APY on crypto-backed loans, but MyConstant offers a bank-beating 4% APY on fiat deposits. You can also earn 9% APY by allowing MyConstant to allocate your cryptocurrency for the purpose of providing decentralized exchanges with liquidity.
At the other end of the spectrum, borrowers can take out crypto-backed loans. There is no minimum loan term in place and interest rates start at 6% APR. You can elect to receive the funds in real-world fiat currency direct to your bank account. To benefit from this, you’ll need to deposit some cryptocurrency as collateral.
If you’re keen to find out more about what the peer-to-peer provider offers, continue reading through this review. I cover everything there is to know about the provider from the perspective of both investors and borrowers.
What is MyConstant?
Founded as recently as 2019, MyConstant is a peer-to-peer lending platform that strives to match borrowers with investors. In this sense, the concept is much the same as any other peer-to-peer provider. However, what sets MyConstant apart is that it offers interest-bearing investment opportunities in both fiat and cryptocurrency-denominated projects.
Regarding the former, its Flex account offers a competitive interest rate of 4% APY on fiat deposits. And the latter – its Crypto-Backed investment service allows you to earn up to 7% APY by lending your cryptocurrency to other users.
You can also lend out your Bitcoin, Ethereum, and Binance Coin holdings to decentralized exchanges and earn 9% APY along the way.
If you’re looking to borrow funds from the MyConstant platform, interest rates start at 6% APR. Your loan agreement is backed by the digital currency that you put up as collateral. You will then have the option of withdrawing your loan funds in fiat currency or stable coins.
Investing at MyConstant
Bearing in mind that MyConstant offers services to different target markets, it’s best that I split my review in two. To get the ball rolling, let’s start with the investing side of the platform.
The Flex account at MyConstant allows you to earn interest on your fiat currency. As you likely know, interest rates offered by traditional banks and financial institutions are now at record lows. For example, US powerhouses JPMorgan Chase and Wells Fargo each pay just 0.1% APY on standard checking accounts.
As such, you’re nowhere near outpacing the rate of inflation, meaning that your money is losing value. In the case of MyConstant and its Flex account, you’ll earn 4% APY.
The interest is compounded and paid each and every second, and there is no minimum redemption period. On the contrary, you can withdraw your funds at any given time. I also like the fact that you can invest from just $10, which means you can get to grips with how Flex works before making a larger commitment.
Here’s how the investment process works when taking advantage of Flex:
- Upon registering an account with MyConstant, head over to the deposit page.
- You will be able to deposit funds via ACH (US accounts only, maximum $5,000), Zelle (maximum $2,000) or a traditional bank wire that comes with no limits.
- MyConstant will credit your account within 1 business day of receiving the funds
- You will then begin earning interest on your investment
- You can cash out your investment at any given time
If you want to end the investment early, you need to sell it to the secondary market and get the lower interest rate (or zero).
Just to clarify something that wasn’t that obvious to me when I first joined MyConstant, when you deposit money or crypto to MyConstant that money will automatically start earning 4% in the Flex account without you having to do anything.
The Crypto-Backed offering at MyConstant also allows you to earn interest, albeit, you will be lending funds to users of the platform. These are users that seek to borrow fiat currency in return for putting up their cryptocurrencies as collateral.
This can be beneficial for you if you have surplus funds, as the loans are secured. That is to say, if a borrower ends up defaulting on their repayments, MyConstant will have the legal remit to sell the cryptocurrencies that they put up as collateral. More on this later.
In terms of your earning potential, the Crypto-Backed investment plan offers an APY of up to 7%. You can choose from three loan terms – 30 days, 90 days, or 180 days. For this, you will earn 6%, 6.5%, or 7% APY, respectively.
There is an additional interest-bearing investment opportunity at MyConstant that pays 9% APY. This is offered when you part with your Bitcoin, Ethereum, or Binance Coins. You won’t, however, be lending your cryptocurrencies to other users. Instead, MyConstant uses your coins as a means of providing liquidity for decentralized exchanges.
For those unaware, cryptocurrency exchanges will often pay a ‘market maker’ rebate to those that provide the platform with liquidity. After all, this is a crucial requirement to ensure that there is enough volume on the exchange for buyers and sellers to trade.
This market maker rebate is how MyConstant is able to pay you 9% APY in interest. According to the platform, this particular scheme is backed by a MyConstant guarantee of $3 million.
Loan Originator (Coming Soon)
The Loan Originator offering at MyConstant was due to launch earlier this year. However, this has since been postponed due to the COV-19 pandemic. Nevertheless, I’ll briefly explain how this particular investment stream works, as MyConstant hopes to have it up and running by the end of 2020.
In a nutshell, you will be lending money to offline borrowers in Europe and Russia. More specifically, you will be accessing these markets via loan originators. These loans also come with a buy-back guarantee, which kicks in when a late payment exceeds 60 days.
As always, the buy-back guarantee is only as good as the firm behind it. As such, there is, of course, no guarantee that you will get your original investment back in the event of a default. With this in mind, the Loan Originator offering at MyConstant pays up to 11% APY.
When it comes to loan durations, this can be from just 6 months, up to 15 months.
Borrowing at MyConstant
So now that I have covered the investment side of MyConstant, let’s explore what’s on offer for those of you that wish to use the platform to borrow.
The crypto-backed loan process at MyConstant works much the same as any other platform operating in the space. That is to say, by depositing cryptocurrencies into MyConstant, you can borrow fiat currency. As always, the amount that you can borrow is entirely dependent on how much you put up as collateral.
More than 40 digital currencies can be used as collateral to secure the fiat loan, with the LTV (Loan-to-Value) based on the specific cryptocurrency. For example, by depositing Bitcoin, you’ll be offered an LTV of 66%.
Let’s look at a quick example of how such an agreement would work in practice:
- You want to borrow $5,000 in US dollars
- At an LTV of 66%, this means that you will be required to put up 0.7363 BTC (based on a current market price of approximately $10,100).
- You transfer the Bitcoin into the wallet of MyConstant
- On receipt, your $5,000 loan will be deposited into your bank account
- It can take between 3-10 days for the funds to arrive in your bank
In terms of interest rates, this also stands at 6%, 6.5%, or 7% APY on 30, 90, and 180-day loans – respectively.
In terms of repaying your loan, you can do does this via fiat currency, cryptocurrencies, or stable coins. You will receive your collateral back when the loan is repaid in full.
Benefits of Crypto-Backed Loans
There are two benefits, in particular, that spring to mind when opting for a crypto-backed loan. First and foremost, the platform does not run credit checks on any of its loan applicants. As such, this might be suitable for those of you that need access to cash, but you don’t have the required financial profile to use a traditional lender.
Secondly, and perhaps most importantly, crypto-backed loans are a great way to free up capital that is tied up in your digital currency portfolio. For example, let’s suppose that you have $10,000 worth of Bitcoin sitting in your anonymous wallet. Bitcoin is not an income-generating asset class, meaning that you are potentially missing out on investment opportunities available elsewhere.
If you are a firm believer that your Bitcoin will one day be worth significantly more than its current market value dictates, then you might be reluctant to sell your holdings. A simple solution to this conundrum is to opt for a crypto-backed loan.
The reason for this is that you will have access to ready-made cash, while at the same time, avoid the need to sell your cryptocurrencies. In turn, if the value of Bitcoin rises while the loan is still outstanding, you haven’t missed out. Instead, you will receive the same quantity of coins as you initially deposited – as long as you do not default on the loan.
Fees at Constant
When it comes to fees, you won’t be charged anything to invest, deposit, transfer, or withdraw funds. There is, however, a number of other fees that you need to take into consideration.
- Matching Fee: When you look to borrow funds at the platform, you will pay a matching fee of 2.5%. There is no matching fee if you are investing.
- Early Repayment: It is somewhat frustrating when platforms charge an early repayment fee. Nevertheless, if repaying the loan in full before 75% of the duration has elapsed, you will pay 50% of the interest that would have been due. If the loan is repaid after 75% of the term has passed, you will pay 100% of the remaining interest.
- Late Repayment: Late repayments are charged at 10% of the total interest due. This is the case if the payment is more than 24 hours late.
If you need to speak with a member of the MyConstant support team, you can do this through Telegram, email, social media, or a dedicated telephone line. You can also speak with Constant via your Facebook Messenger account.
Email: [email protected]
Telephone: +1 646 809 8338
According to MyConstant, the customer service team is operational 24/7.
Is MyConstant Safe?
When it comes to the safety of your funds, this will ultimately depend on which investment stream you decide to use. In the case of crypto-backed loans, the borrower is required to put up collateral via digital currency. In theory, were the borrower to default, then MyConstant would sell the coins.
It is then hoped that this would cover the value of what you are owed. However, the cryptocurrency markets often move in a parabolic manner, so nothing is guaranteed. For example, the value of Bitcoin went from highs of $10,300 in February 2020 to lows of $4,400 just a month later. This represents a capitulation of over 57%.
One of the one hand, the value of Bitcoin has since recovered, which is great. However, such a rapid reduction in value could have a severe impact on your ability to get your money back if a borrower defaults.
To counter this risk, MyConstant notifies borrowers when the market value of their cryptocurrency collateral is reaching the point of liquidation. This is where the LTV reaches a specific level. If the user does not top-up their collateral balance by depositing more cryptocurrency, MyConstant might be forced to sell the coins.
In the case of the Flex account, it is notable that you stand to earn 4% APY. This is considerably more than traditional high street banks pay – especially if you’re based in the US. However, what you won’t get from a Flex account is that all-import FDIC insurance. This covers deposits up to the first $250,000.
MyConstant explains that you can switch off the Flex investment plan at any time. When you do, your funds will be placed with Prime Trust. This is the custodian that MyConstant has partnered with. Prime Trust will allocate client funds across several insured bank accounts with an aggregate limit of $130 million. In switching Flex off, you won’t earn any interest on your money.
I don’t like that there is little transparency on the team behind MyConstant. I personally know who the team is as I have been interacting with them while investing in the platform and recording a podcast episode for Mastermind.fm, however strangely enough they don’t show the faces and names of their leadership team. This page is a must for any investment platform in my opinion, as not having it will undoubtedly reduce people’s perceived trust, so I hope MyConstant eventually introduce it.
MyConstant is also available via a dedicated mobile app. You can download the app free of charge from the Google Play or Apple Stores.
From what I can make out, you’ll be able to access all of the same account features as found on the main desktop website. The app has a rather poor rating of 3.7/5 on Google Play, albeit, this is across just 37 reviews. Over on Apple, the app is rated at 4.1/5 across 15 reviews.
The app interface feels too childish to me, but it may work for a younger audience.
MyConstant Review: The Verdict?
In summary, MyConstant offers a range of alternative investment services for those of you who are seeking higher returns on your money. For example, while US banks like Wells Fargo and JPMorgan Chase pay just 0.1% APY, you’ll get 4% APY at Constant.
There are no lock-up periods or early-redemption fees, so you can get your money out at any given time. Your earning potential increases to 7% APY if you wish to loan money out to borrowers of the site. This increases to 9% APY if you are happy for your funds to be used as liquidity at decentralized cryptocurrency exchanges.
At the other end of the spectrum, borrowers have access to fiat currency financing in return for putting your digital currency up as collateral. There are no credit checks, and the amount that you can borrow is dependent on how much you are looking to deposit into MyConstant.
On the flip side, there are several risks that you need to consider before taking the plunge with MyConstant. For example, the 4% APY offering is not backed by FDIC insurance. Similarly, although loans are backed by cryptocurrencies in the form of collateral, a sudden market crash could mean that defaults are not covered by offloading the respective coin.
With that said, MyConstant does note that if such a scenario does occur, the borrower will have the opportunity to top-up their collateral to bring the LTV ratio down. If they fail to do this after three margins calls, Constant might be forced to sell the coins to ensure that investors are protected. There is also the option to select auto top-up from extra crypto deposited on your account, which greatly reduces the risk of margin calls, but means you have to put up extra crypto in their custody.
Overall, although there are a few things that I think this platform can improve, I have been getting the returns promised on my investment as expected.
I like that the loans are backed by crypto, and the fact that you can deposit and withdraw in crypto, which is a big bonus to those who are crypto enthusiasts who might have a lot of their net worth stored in crypto but would be short on fiat currencies such as Euro or USD.
Hopefully, in the coming months and years, MyConstant will improve in certain areas and reach big player status, at which point I would consider it a safer bet worth than it is currently.
MyConstant offers a range of alternative investment services for those of you who are seeking higher returns on your money. It’s a platform that has earned brilliant reviews from users and has become one of the largest in the crypto P2P lending space. I’ve been a happy user since early 2020.
- Does what it says on the tin, so far.
- Good rates offered.
- Collateralised loans (crypto-backed)
- The $3m guarantee is a bit flimsy in my opinion.
- Short track record having launched in 2019.
- Scores low on transparency.