MELDing the Auto Industry

MELDing the Auto Industry

Bill Roy

Bill Roy

MELD Ambassador

August 25, 2022

Many on crypto-twitter keep asking ‘wen lambo?’ so… let’s talk cars! 

Transportation, as we all know, is everyone’s favorite pastime and topic of discussion <queue eyeroll>. Jokes aside, blockchain technology can enhance many aspects of the auto industry! Trust is a core issue that many people struggle with at various points of a vehicle’s lifespan. Whether it’s trusting the used car dealership hasn’t turned back the odometer, that the salvaged rebuild has been completely restored with functional parts, or that the salesperson is giving you the best deal around (hint, they probably aren’t), introducing decentralized web3 components to these scenarios can vastly improve the user experience and provide some much-needed clarity.

Regarding production and maintenance, certificates of authenticity, quality assurance reports, vehicle history, and supply chain data can all utilize crypto for the betterment of all parties involved. Having accurate and complete data regarding a vehicle is crucial. While some companies have started providing this, it can still be improved upon - look at me, I’m starting to sound like that cartoon fox, and I don’t mean a pfp from a 10k NFT series! From the manufacturers to the dealers, the owners, and the mechanics - everyone can benefit by taking trust out of the equation. Distributed data that is public and immutable gives us all the pertinent information. We can expand further to the vehicle-related components, such as driver’s licenses, vehicle registration, and insurance policies. To me, three core areas of the industry can greatly benefit by incorporating blockchain - production, reporting/licensure, and sales and maintenance. The last category may be the most ubiquitous, but I find all three equally important.  

Inventory and quality assurance are crucial to the success of companies of all sizes in the auto industry. Using blockchain can provide better end-to-end supply chain data that are transparent and accurate. Let’s say there’s an issue with an airbag for a certain model built out of a particular factory for a specific timeframe. The company can easily query the on-chain data to identify the scope of the impact and begin the risk mitigation process. This also could be done by the general public if someone is looking for particular parts for a restoration project, or if they want to independently verify there aren’t any issues with a particular manufacturer or their vehicle’s parts. 

If you don’t think that blockchain can improve the user experience in the realm of reporting and licensure in the auto industry, ask yourself this question - would you rather sit in the Department of Motor Vehicles for hours on end to renew your documents, or would you rather sign a wallet key from your computer/phone through a dApp? Rather than the torture of waiting hours for your ticket to be summoned over a loudspeaker to go stand in front of a teller only to be told you’re missing a document, the process could be streamlined to be more comfortable and efficient process. It’s still the DMV and not that exciting, but you’d have a better experience when it comes due. The same goes for when you are in the market for a used car - you want to be able to easily and quickly verify all the maintenance and replacements done on a particular vehicle. Likewise, when it comes to verification, there are many scammers out there that blockchain technology can help combat through verification/certificates. There are many avenues for these scams to attack innocent people, including letters, emails, phone calls, and texts. The frequency of these attempts to steal your money has gotten so bad that it actually has become a popular meme.

How can MELD be of Assistance? 

Yes, even MELD will be able to enhance the user experience in the auto industry! Think about what happens when you buy a vehicle, used or new, and it becomes quite obvious. 

Many people can’t buy a vehicle outright - they just don’t have the out-of-pocket capital. The dealerships often have a financing division or partner company to provide a one-stop-shop experience. This involves credit checks and opening a new line of credit, sometimes with an alarmingly large interest rate. Sometimes these dealerships will offer special financing promotions for a period in which there is 0% interest, but these are often restricted to consumers with higher than average credit scores. Alternatively, a person can go to their bank or other third-party lender and fill out an application for pre-approval of an auto loan. This also involves a ton of paperwork, credit checks, and guess what - an interest rate based on the credit score that can be quite large. On average, auto loan rates in the US can vary from 2.5% to 21% as shown in the Experian State of the US Automotive Finance Market (Q1 2022). In traditional finance, the lenders have all the power and profit from your payments. 

MELD is a non-custodial decentralized banking protocol that will let you easily lend or borrow both crypto and fiat. Rather than letting intermediaries siphon an income from you, you can take control by using your equity to acquire more equity. The power of using your crypto to get a fiat loan is that you are essentially paying yourself and you can bypass the ridiculous paperwork and checks. When your loan is complete, you can use your collateral to acquire more - lather, rinse, repeat.

While the rates for loans through MELD aren’t yet known, the variety of novel products outlined in the MELD Whitepaper, such as the Genius Loan, will provide consumers with a new powerful tool that can be used beyond auto loans. Rather than trusting a company has your best interests in mind (they don’t), MELD empowers you to be your own bank. You can collateralize your crypto for a fiat loan while remaining the sole custodian. You can buy your vehicle outright without the paperwork or credit checks since it's your over-collateralized debt position. You keep the keys to your crypto AND you get your new car keys! 

So funny enough, the answer to ‘wen lambo?’ can be ‘wen you loan to yourself”.

Disclaimer

The opinions shared within this article are those solely of the MELD Ambassador. Note that the content within should not be considered financial, legal, or tax advice. Neither the author nor MELD Labs PTE Ltd. are financial, legal or tax advisors. None of this content should be used to make any form of financial, tax, or legal decisions. Do your own research and consult professionals as needed for official policies, restrictions, and requirements in your jurisdiction.

If you believe in the MELD vision, want to support this initiative, and want to help promote the future of finance then we want you to join the MELD Ambassador Program!

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