This is my third review of the MyConstant platform. Will this be the last time I do so? Read to the end and find out.
This is one more update to my experiences with the MyConstant peer-to-peer (p2p) platform and here I will highlight some of the things I like and a couple of the things that I dislike.
First of all, if you have not read my previous posts on my constant you can check them out here and here. MyConstant, for those of you who do not already know is a secured non-custodial p2p lending platform responsible for linking up investors with borrowers and do so by cutting out the middle man (the banks). As a side note, I am trying to build my amount of referrals up (Sign up here) and I am compensated for that. I just wanted to be transparent about that but this is a site that I do personally use and have several thousand dollars invested through the platform.
The loans on Constant are underwritten and secured by an escrow system that stores cryptocurrency as collateral. So, an example would look like this. Tom would like to borrow $1,000 for 30 days. Tom would deposit a crypto coin such as Bitcoin (BTC), Etherium (ETH), or BNB (A coin developed by Binance in 2017). You might be adverse to dealing with Crypto for several reasone, but do not worry you do not need to get into Crypto anything in order to enjoy the returns MyConstant is offering. The key here is that Tom needs to deposit $1,500 USD worth of the coin as collateral. This is necessary due to the volatility in the crypto markets and ensures that the collateral could be sold to repay the loan in the event of a default.
Therefore, Harry wants to earn interest on some of his money so he loans $1,000 to Tom for a 30 day term at 6% interest. This is all done anonymously through the MyConstant platform and completed through a smart contract. In the event that Harry does not pay Tom back his principle, Tom’s crypto is sold and Harry gets repaid his principle and interest. Furthermore if the value of the collateral is diminished through market conditions, the crypto is sold to pay Harry back.
*MyConstant does allow users to top up their crypto in the event that there is a big swing in the value and allows the loan to continue without the crypto being sold.
But why would I put up my Crypto as collateral? Why would I not just sell the Cyrpto and use those funds instead of taking a loan? There are many people who believe that the value of Crypto will increase significantly which would require them to have to buy more Crypto and miss out on the price increase.
I really like the idea that my loans are collateralized. I have used other p2p platforms in the past and have been burned. You can read about it herePeer-to-peer lending, is it right for you?. Too often p2p platforms fail investors by a lack of due diligence which leaves us with losses.
I also like that I am able to chose the term of my loan. Loans are available in 30, 90, and 180 day increments with the interest rates set at 6%, 6.5%, and 7% respectively. Personally I prefer the shorter 30 day terms which I feel provides me with a more liquid position allowing me to invest in other things should a hot opportunity present itself.
I wanted to try out the loan aspect of MyConstant so I went took a 30 day loan and used some of my BTC stored on the site as collateral. Now here is where I come to the point I am not a fan of. There is a matching fee of 2.5% which is OK because the site needs to generate some revenue in order to keep running. There is also an early repayment fee. I chose to terminate my loan early because I really did not need the funds, I just wanted to check out the function to have a better understanding.
The early repayment fees look like this: If you repay the loan before 3/4 of the term you will end up paying 50% of the interest that you would have incurred if you took the loan to term. If you repay your loan after 3/4 of your term (up until the due date) you will pay 100% of the interest for the term. If you repay late you will incur an additional 10% of the total interest due. I will say that there are multiple warnings and notifications of the fees before you repay any of the loans so they get a plus for the transparency.
I have pretty much covered the 4% return on the Flex account in my other articles and anyone who has ever had money in a traditional bank in the past decade knows that 4% return on your idle cash completely destroys the rates that any bank or credit union is currently offering. That also includes rates on Certificates of Deposit (CDs).
There is one more part of MyConstant that I would like to cover, and this is probably the most lucrative opportunity on the entire site. That special little portion is called the secondary market. These are where some people are willing to sell one of the loans they are invested in and get their funds back early. You might be asking yourself why you would want to buy one of those short term loans. The deal with these is that the interest rates are very high. Let me say that again. The interest rates are very high. I have seen rates as high as 137% for a few days term. Now these are APRs so that is a yearly percentage which you will only be able to earn the rate for a few days.
The way MyConstant does this is they open the option up to diamond level members (invest 100K within 180 days) and they get the first shot at trying to get these loans. MyConstant then open up the loan to all members for 10 minutes. At the end of 10 minutes the pool closes and one of the entrants is chosen (at random) to fund the loan. I have seen pool sizes of 15-30 people, so I feel confident about the odds. The problem is that they seem to always come between 7PM and 1AM and you have to be quick, 10 minutes goes by quick when you are not in the pool and very slow after you are in.
I have yet to win one of the secondary market loans but I am confident that once I reach diamond status I will increase my odds.
My final thoughts on MyConstant are pretty much in line with what I have thought since I started using them. I am a huge fan of MyConstant and I think they offer one of the best ways to grow your money securely. They only require $10 to get started with a Flex account and $50 minimum for the Crypto backed loans. I started small because I wanted to get a feel for the site and make sure it was not a scam. I now have several thousand dollars in the site that I am continually rolling over into new loans and I am thoroughly enjoying watching my money grow.
So, will this be my final update on MyConstant? I do not think so. I will continue to use this platforms as I think this is the best one I have found and once you get the hang of it, the site is easy to use.
If you have any questions reach out or leave a comment. Thanks for reading.