Decentraland Partners With Lending Network Ripio Allowing Users To Mortgage Virtual Properties
Decentraland has signed a partnership with Ripio Credit Network (RCN) enabling crypto enthusiasts to buy a property in Decentraland's virtual reality world on credit, similar to a real-world mortgage.
Decentraland has signed a partnership with Ripio Credit Network (RCN), an international and border-free crypto lending platform.
The new partnership means that crypto enthusiasts can now buy a property in Decentraland’s virtual reality world on credit, similarly to how real-world mortgages work.
Decentraland and Ripio sign crypto mortgage Partnership
Decentraland has signed a partnership with Ripio Credit Network (RCN), a borderless peer-to-peer cryptocurrency lending platform.
The deal should see users apply for mortgages and use the funds to develop their parcels, without having to use their cash to buy the MANA needed to facilitate the developments.
RCN mortgages will likely continue to feature the platform’s current annual interest rates that range from 28 percent to 78 percent, quite high compared to real estate rates.
The mortgages will, therefore, feature shorter repayment periods and slightly higher interest rates, which is unlike traditional mortgages that have repayment periods running for 20 to 30 years, and competitive interest rates.
Unsurprisingly, most RCN lenders appear to prefer those loan requests whose maturity is shorter rather than longer.
How to apply for a Virtual Mortgage
Users who wish to register for the Decentraland mortgage will first have to complete an application form. Thereafter, they need to pay at least 10 percent of the property’s market value as a down payment.
Once this is done, Ripio advertises the loan request, allowing investors to analyze the claim and in turn lend the capital.
The platform creates a smart contract between the buyer and the seller (similar to a mortgage contract) that secures the parcel in question and transfers ownership from the lender to the borrower. The borrower is then in possession of the mortgaged parcel and is free to use it as they please.
However, a lender can request for his or her mortgage via the smart contract if a buyer fails to pay off within seven days after it expires. In the event that a borrower fails to pay his obligation, the property will automatically revert to the lender.
This process is similar to a foreclosure on a property, where the homeowner can no longer make payments to the bank and the bank takes over the property.
Decentralizing virtual reality
Decentraland CEO Ariel Meilich said that the platform was dedicated to bringing decentralization to the world of virtual reality, where users adhere to “open standards” rather than answering to a centralized institution.
He added that the partnership reinforces their commitment to making “the buying and selling of land” decentralized; with users able to access it on one of the leading blockchain-based credit networks in the world.
RCN CEO Sebastian Serrano referred to the partnership as one that presents an “exciting new horizon for Ripio,” adding that it illustrates the potential benefits of having different Ethereum dApps can collaborate in improving services offered to users.
Decentraland’s LAND in high demand
Decentraland is a virtual reality focused decentralized application (dApp) which provides a platform and the infrastructure which users can buy and use to build 3D games and other apps.
The platform provides finite space that is subdivided into small parcels each measuring 10m by 10m. Each of these pieces of space is represented by units of LAND, an Ethereum token that tradeable on Decentraland’s marketplace.
The Ethereum-based virtual reality platform could attract even more users in 2019, with MANA and LAND hitting new records in spending and price respectively.
By October this year, a total of $23.5 million in MANA had been spent on LAND, with one parcel in Decentraland’s virtual world hitting a then-record high of $175,000. However, that was before one user purchased a 126-parcel estate at $215,000, setting a new record.