Story
Getting a dollar loan against Ether with no banker, application, or credit check
Shaan walks through a simple DeFi loan: he staked Ether on Compound, could earn 5-7% lending it out versus ~0.001% at Wells Fargo, then borrowed USDC against it and cashed out to dollars on Coinbase, all without a banker, application, or credit check.
“And I got a US dollar loan that I could go use to go buy, you know, a pizza right now if I want to. And I was like, well, that's pretty sweet. I never had to talk to a banker, fill out an application, do a credit check. I didn't have to do anything and I was able to get a loan.”
Tactic
The DeFi trade: borrow against your Ethereum to fund startups
Shaan explains his Compound Finance play: post Ethereum as collateral, borrow up to 75% in a stablecoin (USDC) at a very low rate, sell it for dollars, and invest those dollars into startups, keeping his cash free for things like buying a house.
“you go to Compound Finance and what you can do is you can put up Ethereum as collateral. So I put in, let's say $10,000 of Ethereum or $100,000 of Ethereum. And, um, then I can borrow up to 75% of that in another currency. Like for example, DAI or USDC, which is Coinbase's stablecoin. Basically, you put in, let's call it $100, you can borrow $75 of that on there at a very low rate.”