How would you go about doing this? As an example, if you loaned someone 167 monero to buy a car and expect them to pay you back in 7 years like a bank does you would be requesting 167xmr*6.02% (to counter xmr inflation) for a total of 177.053xmr. 177.053xmr/84 (months in 7 years) would be 2.107xmr a month. At the moment that is fine, but if the usd price of monero rises and the borrower is being paid in usd then they are going to default and you will loose the xmr. The only way I could see to counteract this would be to lower the Monero payments per month, but then that would take even longer to be repaid.
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But if you pay out Monero for the loan and then you peg it to Fiat and they pay you back in Monero with that amount of Fiat, then you will lose Monero as the price increases. So you will turn say 177 Monero into say 100 Monero. That is something you don’t want to do.
Well you don’t want to lose Monero and you don’t want to lose fiat, but you can’t have both. XMR isn’t a stablecoin.
If it matters more to you that you get your XMR back, then require XMR payments. You need to include the XMR volatility as part of the interest rate calculation.
If it matters more that you get your fiat back, then require fiat-equivalent in XMR payments.
Or, demand you get either XMR or fiat back, whichever is higher. But I don’t think a borrower would like this. Tesla did this when they let you pay in BTC; Tesla reserved the right to refund you in whichever currency was cheaper. For the consumer, it a bad deal.
I don’t care if I lose Fiat, but I do not want to lose Monero.
Then you need it factored into the interest rate you decide upon that volatility may cause the price of XMR to get so high that your debtor would rather default than pay the debt.
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What do you mean you’d be left with more value? If I loan a hundred and seventy-seven Monero and I only get a hundred Monero back, I am down value. I want the loan amount denominated in Monero and I want the loan payments to be repaid in Monero. I don’t want somebody to tell me I need to borrow a hundred thousand dollars. I want somebody to tell me I want to borrow a hundred and seventy seven Monero.
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Oh, I think I see the disconnect. I want the Monero, not the dollars. So, even in that scenario where I lose $50, I don’t care, because I now have 200 Monero, which is what I wanted.
Edit: I am not after the number of dollars to go up. I am after the number of Monero to go up. I want to see my wallet balance increase from 100 Monero to 200 Monero and don’t give a fuck about the US dollar price.
I do not believe we have the price stability to be useful in lending applications, but if I were to do it, I’d be sure to take possession of collateral enough to completely repay the balance of 177 Monero. Otherwise, you’re just asking to be taken for the fool. Signing over the title to their car might serve as collateral, where you hold a paper title that’s he’s physically signed over to you, then you just don’t register it in your name, so the DMV still thinks the car is his. If he breaks the loan contract, you register the car in your name and have it repossessed legally. Still, I’d only do that if you know he can’t move away easily. Interesting application, though, I’d like to hear more real world applications like this.
That’s definitely a thought, but I’m wondering if even repossessing the car would be enough to get you the rest of your Monero back when it was sold.
Edit: Effectively, when you borrow money to buy something now, you are shorting the currency you are borrowing, and shorting Monero is a really monumentally stupid idea.
Some financial alchemy would help. The borrower would need to buy some derivative that pays off if monero goes up, like a call option. Impossible to find today and possibly expensive for low amounts.
I think eventually Haveno could be made capable of doing this.
Loans in XMR/BTC could make synthetic bitcoin for holding somewhere and then withdraw after volatility periods
