Cryptocurrencies are digital assets now adopted for various uses. A young segment in the market now allows you to have these virtual currencies from a loan. The whole explanation about crypto loans is then given in the following.
What is a crypto loan ?
The crypto loan also called DeFi is a type of decentralized financing. Find through this resource some details about this concept.
Crypto lending involves lending cryptocurrencies or fiat currencies with the intention of collecting interest later. This is normally possible through crypto lending platforms.
Crypto loans are also done on the basis of collateral and the definition of a given period for repayment.
How does a crypto loan work ?
Generally, crypto loans take place on platforms specialized in this field. The lender places his assets on the platform, as an investment, waiting for the prices to rise. On the other hand, the borrower comes to lend some or all of his cryptocurrencies.
In this case, he accepts the conditions offered by the lending platform. That said, it is imperative that the borrower deposits cryptocurrencies as collateral. It should be noted that the collateral assets must be greater than the crypto currencies to be borrowed. However, both parties conclude the agreement with a smart contract.
What is the advantage of crypto loans?
First of all, crypto loans do not require application fees and a defined status. Thus, anyone can get a crypto loan and make personal use of it. Also, with the smart contract, the transactions for the loan are transparent.
To this end, with safe platforms, this type of loan is secure. In addition to this, the collateral deposited can increase in value before the signed repayment term. This advantage allows the borrower to repay his crypto loan without incurring a loss.
Besides, the lender acts as an investor when it comes to crypto loans. Therefore, he gets his repayment with interest with the confidence of having protected his crypto-currencies on the platform. In addition, crypto lending is fast and easy.