"Borrowing against crypto refers to using digital assets, such as Bitcoin or Ethereum, as collateral to obtain a loan in stablecoins or another supported currency. The collateral is typically locked by the provider until the debt is repaid. Such loans are offered by various exchanges and specialized services, each with its own terms: interests, fees, minimum collateral, and supported currencies."
"Collateral - digital assets locked by a platform as security for a loan. LTV (Loan-to-Value ratio) - a metric that shows the relation between the loan amount and the current value of the collateral. Liquidation Threshold - a predefined LTV level at which the system may sell collateral to cover the loan. Fixed-Rate Model - loan conditions where repayment terms remain constant according to predefined rules."
Borrowing against crypto uses digital assets like Bitcoin or Ethereum as collateral to obtain loans in stablecoins or other supported currencies. Collateral is locked by the provider until repayment. Platforms vary in interest rates, fees, minimum collateral and supported currencies. Key terms include collateral, LTV, liquidation threshold, fixed-rate model, and flexible-rate model. Lending occurs on centralized platforms where operations are managed internally and on decentralized platforms where smart contracts enforce mechanics and liquidations. Crypto-backed loans provide liquidity without selling assets and preserve market exposure, but they carry risks including liquidation if collateral value declines and platform-specific terms.
Read at London Business News | Londonlovesbusiness.com
Unable to calculate read time
Collection
[
|
...
]