A DeFi-Powered Gym

How a DeFi trader from Canada keeps his brick-and-mortar business alive in times of Covid.

APE Parkour is a gym in Grand Prairie, Canada, which had been running successfully for some years when the government forced it to close down because of Covid restrictions. This could have meant bankruptcy for its founder Chad McDonald, as for so many small business owners. But he does not give up and uses Decentralized Finance to keep his dream alive. His situation is especially critical, as he is not only paying rent for his current gym, he is also investing in his own building for the future.

Chad does not like banks, as he had bad experiences with them in the past. Instead of taking a bank mortgage, he made a private arrangement with a construction company. They are giving him a private mortgage which he originally planned to pay by the revenues of his gym.

But these revenues suddenly plunged to zero when Corona struck, and he did not receive any support from the government, let alone banks. So what to do? Chad found a solution in Bitcoin, Ethereum and Decentralized Finance. First he turned the employees of this gym into construction workers to save costs.

Then he started to take private loans from friends, business partners and acquaintances, as he needs to pay the mortage, his employees and the various construction companies who are working on his building.

“I only take loans in Bitcoins and Ethereum, never in Fiat Money”, says Chad. “I use those coins as collateral on DeFi sites to get dollars in which I pay mortgage and salaries.”

He has been trading in various crypto coins with so much success, that he could always pay back his loans and their interest. “I am using the Aave platform for this, as it is the only platform which allows me to trade and to get a loan for a collateral at the same time”, explains Chad.

His lenders receive a 15% interest for a one-month loan, much more than they would get at any crypto lending platform. “It may sound crazy, but it works.” says Chad. “I am a pretty good trader, as I have many years of experience in Forex trading. In the last months, Bitcoin and Ethereum have gone up so much that I make enough money to pay everyone in time who has trust in me.”

Currently not only his three employees, but another ten people in various construction companies live on the DeFi revenues Chad McDonald is able to generate. But what happens if Bitcoin goes into a bearish phase or if he gets less lucky with his trades? Chad knows that he is running a high risk, but he says he has no choice. His main goal is to finish his building, which is estimated to be worth more than 3 million Canadian dollars when it is ready. In the worst case he can take a bank mortgage on that building, or he has to sell the coins he owns.

His building is nearly ready and he hopes to move his gym there and open it to the public as soon as possible. “The funny thing is that my builders are among the few in Grand Prairie with stable work now and all through 2020”, says Chad with a smile. “When their boss agreed with me on the private mortgage for my building, everyone thought he was crazy to do this. Now they envy him.”

Until he can get back to his regular business, he rents out his old gym to clients. “The local health office wanted to stop me doing that, but legally they couldn’t” says Chad. “As long as I stick to the hygienic rules, we may rent out our place, because we are not open to the public.”

As Canada is currently suffering from government lockdowns, Chad has moved to Mexico, where life is normal and he can offer parcour trainings at a beach gym. He has also started to share his experiences with DeFi in online webinars. As a blockchain agnostic, he likes Bitcoin as much as Ethereum, but would prefer to do his trades directly on the Bitcoin blockchain.

“As much as I am thankful to Vitalik Buterin for having invented Ethereum, gas fees in the last time have been outrageous”, he says. He would definitely switch to a Bitcoin-based Aave with lower transaction fees as soon as it is available.

by Aaron Koenig