This is Your Reminder That You Don't Ever Need to Repay Your Debt

Debt is an invisible weight that affects billions of people. 

In fact, almost half of the people on Earth now live in countries that spend more money paying interest on their debts than on education or health, according to the United Nations.

Traditional financial institutions are massively contributing to this problem, with many people across the world being left to worry about how they’ll even pay off the interest on their debts.

But Liquid Loans isn’t like traditional lending. It’s a decentralized interest-free protocol that lets you access loans without having to worry about ever repaying your debt at all. 

Here’s how Liquid Loans does things differently.

How Does Lending Traditionally Work?

Most lending today is handled by centralized financial institutions.

When someone puts their money into a bank account, the bank uses this money to provide loans to other people and businesses. In exchange, the bank pays an interest rate to the person who deposited their money.

But the interest rate that banks offer to people who deposit their money is lower than the interest rate that they charge to people who take out loans. 

This difference, known as the “spread”, is a significant part of how banks make profit.

When it comes to the lending process itself, it typically starts with someone reaching out to a financial institution and asking to take out a loan.

For instance, if you were to walk into a bank and ask to borrow money, you would first be evaluated based on how likely the bank thinks it is that you will be able to pay out your loan.

Based on this evaluation, you would then be required to give a certain amount of money, known as the principal, to the bank. In return, you agree to repay the principal along with an additional amount known as interest

People rely on loans for a variety of reasons. For millions of people around the world, student loans allow them to access higher education, loans from banks allow them to buy homes, and credit card loans allow them to afford basic necessities while living paycheck to paycheck.

Loans can even allow people to access liquidity without having to liquidate their assets. This is done by putting up a valuable asset, such as a car, home, or even an investment position as collateral. 

Traditional Lending Exploits Millions of People

Traditional lending is often predatory.

Banks and other loan providers frequently put people into a cycle in which they are constantly paying money to try and repay their loans, without much hope of ever becoming free from their debts.

This is especially common with loans that have high-interest rates, which can leave people paying more in interest than they are even able to earn. This places ordinary people in constant poverty.

In the US alone, household debt reached a record $16.9 trillion USD this year. This figure includes common types of debt like mortgages, vehicle loans, student loans, and credit card debt.

Low interest rates, on the other hand, make borrowing cheaper but still exploit people who are in financial hardship or need access to liquidity.

In fact, leading up to the 2007–2008 financial crisis, it was common for loan facilitators to encourage as many people as possible to take out loans by offering “low interest rates.”

This was often done through so-called NINJA loans, which describes loans that were provided to borrowers with "no income, no job, and no assets."

While these loans initially offered low interest rates in order to encourage borrowing, many people were unaware that these interest rates were designed to increase over time. 

This led to millions of people finding themselves under the burden of a sudden debt that they could not afford to pay back.

Decentralized, interest-free loans that you never have to repay

Liquid Loans is a decentralized ecosystem that is entirely free from predatory lending.

The protocol allows you to lend USDL to yourself, a liquid stablecoin that you can freely spend, trade, and reinvest—without having to part ways with your crypto.

In this sense, Liquid Loans is not dissimilar from taking out a collateralized loan on other assets, such as vehicles or property.

But what differentiates Liquid Loans is that the protocol is entirely free from interest and repayment deadlines.

Because there are no middlemen or centralized financial institutions like banks in the Liquid Loans ecosystem, there are no hidden charges and you do not have to pay interest on your loans. 

Liquid Loans has ushered in a fair, decentralized landscape where centralized lending providers can no longer take advantage of ordinary people. 

When you open your Vault to take out an interest-free loan through Liquid Loans, you put up a portion of your $PLS as collateral and are given USDL.

You are then free to get back the $PLS in your Vault whenever you decide by paying back the USDL that you borrowed. No matter how long you take to pay back the loan, the protocol will not charge you extra fees or interest. 

Since you are essentially lending to yourself through Liquid Loans, it is entirely up to you when you’d like to get your $PLS back.

In fact, you even have the option to never repay your Liquid Loans debt. Instead, you could choose to liquidate your Vault and keep the USDL forever instead of getting your $PLS back.

Centralized institutions have exploited lenders for decades. With Liquid Loans, there’s finally a  better way to access liquidity right now without having to worry about when—or even how—you’ll pay it back.