During the great bubble, borrowers in Eastern Europe got mortgages in Swiss francs. When the market collapsed and the exchange rate sank, they were completely fucked. Don’t borrow in currency you can’t easily get your hands on.
For example, if i expect 1 bitcoin 10 years from now, I sell a future contract promising to sell 1 bitcoin at $45,000. If the price falls 5,000 over 10 years, the value of my contract is now worth $5,000 plus the 40,000 value of the coin. If I am on the opposite side and have to pay in bitcoin, I can buy a futures contract for 1 bitcoin at 45,000. If the price of bitcoin rises I am offset by the value of the futures cotnract and if the price falls the negative value of the futures contract locks my price at ~45,000.
The cost here is the premium of the futures contracts, which of course could make it more expensive to operate a crypto mortgage in the long run.
I very much doubt they'll hedge with futures - I'd assume they just sell the crypto as soon as they have it. They might put on a position in a future for the short period of time between agreeing on a price and getting paid.
And of course the house will be denominated in USD. So, bottom line, not much more than a marketing gimmick.
ETA: And perpetual futures are basically just spot, with financing baked into a funding rate (which is positive or negative depending on demand, but unpredictable ex ante, and as such does not solve your problem).
Agreed it is a gimmick, I would imagine everything will be in fiat except at the time of each payment, when the instantaneous crypto value will be credited.
That's already too much risk for 10 years out. The chance of etherium having died in the PoS transition, or the chance of any given market-related contract having an exploit that renders it worthless, are both simply too high to actually participate in for a 30 year loan.
Do you have a reference to a place where I could get one of these futures to get a good feel for how much extra it would cost to secure a loan against that volatility?
Presumably a large mortgage lender would write their own contracts or collaborate with an exchange for a product using their own mortgage contracts instead of USD on margin as collateral for the loan.
I have no idea who that person would be.