Risks for lenders

Lending on MLKY can lose you money. Please read this before you deposit, and only deposit what you can afford to lose.

You may have to wait to withdraw

When the pool's money is lent out, withdrawals wait in a queue until borrowers repay. Withdrawing explains how the queue works.

Defaults can cost you

When a loan defaults, it comes out of your share's value straight away, and you only get money back if something is recovered later. If the borrower repays, or the card sells at auction, the loan is repaid in full with interest.

If nobody buys the card at auction, we take it into our care and may sell it later, but a later sale can bring in less than the loan, and nothing sets a date for it. Until then, that loan is a loss.

Card values can fall

Loans are only for a share of a card's value, so a card can lose some value before a loan against it is at risk. A sharp drop in a card's market can still leave a defaulted card worth less than its loan.

Earnings aren't fixed

What you earn depends on how much of the pool is lent out and on what terms, and cash that isn't lent out earns nothing. Any rate you see in the app is an estimate, not a promise.

The company behind a card can still act on it

Phygitals, one of the two companies whose cards we accept, keeps the power to move, destroy or freeze any of its card tokens, including one that's backing a loan. MLKY can't stop it. We've seen no sign of that power ever being used this way, but if it were:

• A token that's moved or destroyed leaves the loan with nothing to sell, so if that loan defaults, the pool takes the whole loss.
• Frozen tokens can't be sold at all. A defaulted loan against one could be stuck, with no sale to repay it and no way to close it.

A freeze applies to Phygitals' whole collection at once, so it would reach every loan against its cards together.

Private requests carry their own risk

If you fund a borrower's request and they don't repay, you get the card instead of cash. It may be worth less than you lent, and turning it back into money is up to you. And if it's a Phygitals token that has been moved, destroyed or frozen, there may be nothing for you to take.

Risks everyone shares

Software bugs, the stablecoin, the companies that tokenize the cards and your own wallet all carry risk too. They're covered in Risks.