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  LANDOLLAR.  A new type of stablecoin, backed by a new type of mortgage.

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"Blockchain Tech gives us a golden opportunity to mint sound money backed by mortgages, while significantly lowering the cost of transacting, financing and managing real property"   -Davidson Barlett

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Cryptocurrency Stablecoins represent a practical form of digital currency that is gaining popularity for WEB3 decentralized finance, foreign exchange and peer to peer financial transactions. Yet to date, concerns about price stability and backing have limited consumer acceptance of stablecoins as everyday spendable currency, even when advertised as safe and redeemable for US dollars.

 

By definition, a stablecoin’s price is pegged to the value of a national currency in order to fix it’s exchange rate, but this alone does not guarantee price stability when a given coin’s redeemable cash reserves are depleted or frozen due to a bank run or bank failure.

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Likewise, one must make a sharp distinction between pegging, and backing; Just as a given stablecoin’s market price can fluctuate due to external events, claims of backing by commodities such as gold for example, are only as good as one’s ability to get their hands on the gold.

 

For a true money use case, then, a better-backed stablecoin is needed.

 

Enter LANDOLLAR

 

MORTGAGE BANK DIGITAL CURRENCY is minted on demand at mortgage origination to fund senior debt which cannot exceed 50% loan to value. For the borrower, it constitutes a principal-only loan denominated in MBDC, to be repaid in same.

 

When combined with $USD lender funding in the form of junior debt, these 2-tiered hybrid mortgages somewhat resemble a “wraparound” mortgage, but are regulated and underwritten like a conventional one, with similar loan-to-value ratios. Naturally, principal and interest on the junior $USD debt are payable in $USD however, as the issuer and guarantor of MBDC, the lender also acts as a seamless exchange for the two currencies.

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Owing to the lender’s minimal cost of funds from issuing, rather than borrowing most of the funds from conventional sources, they can offer far lower blended interest rates to the borrower.

 

Blockchain archives, smart contracts and blockchain oracles automate many aspects of escrow, title security, loan servicing and contract compliance. This further reduces costs while insuring transparency, and likewise streamlines the process of legal recourse in the event of default.

 

Naturally, in the event of borrower default, the lender may foreclose on the property; in the event of lender failure or bankruptcy, the debt remains secured by the property. In either eventuality, the value of the currency itself remains secure. Assuming proper underwiring, this makes the MBDC debt 200% collateralized at 50% loan to value.

 

Requiring MBDC to pay mortgage principal sustains on-going real-world demand; burning principal as it is repaid regulates supply. Circulating MBDC supply represents loan principal amounts outstanding at all times; nothing more, nothing less. These self-regulating features help maintain both a floor, and a ceiling for the value of the currency.

 

In sum, sound loans make for sound mortgages; sound MBDC mortgages make for sound money. The traits of immutability, public transparency and decentralization are shared by real property and blockchain technology; Mortgage Bank Digital Currency combines them with straight-forward safeguards to regulate currency supply and demand; no algorithms are required.