Let’s talk a little bit about crypto loans here, they are bring more and more popular each day, and the places you can get loans or lend your money are multiplied by numbers exponentially.
Crypto loans existed already in 2017, but they have come to the knowledge of big audiences this year, and they are blooming. Crypto loans and different variations are available in exchanges, platforms, crypto banks, and more.
The principle of lending money is an easy concept to understand. On the other side, you have the lender, and on the other side, you have the borrower, and of course, in the middle, you have a decentralized or centralized platform facilitating the loan.
If you need a crypto loan, you put their cryptocurrency as collateral, like bitcoin, and you will get a fiat or stablecoin loan. Or you can put fiat or stablecoin as collateral and get your loan as cryptocurrency.
The benefits of crypto loans are countless. First of all, no credit checks. You get the loan instantly after you have the collateral in the lending platforms account. You don’t lose your cryptos, and you use your loan elsewhere as you wish. You can also get the benefits of the possible. If your cryptocurrency collateral value rises, for if bitcoins market price increases and you have it as collateral, you can either take more loans against your collateral or withdraw some collateral back to you.
Vice versa, if the value of your collateral decreases, your lending platform will ask from your margin call, which means you have to add some more collateral to stabilize your loan. Don’t worry. They give you a liquidity alarm right on time, so you don’t lose your assets right away. If you don’t stabilize your assets to its current value, of course, they will liquidate your collateral after all. Of course, depends on the lending platforms, their rules vary, and you should check the loan terms before choosing your lender.
Loan interests can be shallow compared to traditional banks. For example, celsius.networks interest rates start at a 0.7% annual interest rate. In general, crypto loans are very competitive against any conventional bank offers. You should also check the loan to value ratio. It means how much collateral you have to put in against your loan. The percentage varies from platform to platform from 20% to 90%. YouHodler leads the way with its staggering 90% value. Still, you should also study first other loan terms before choosing the place, interest, loan duration, asset management, minimum loan amount, and general loan terms.
YouHodler offers a minimum loan of 100USD, with the highest loan to value rate of 90%. On the contrary, Blockfi’s minimum loan is 5000USD.
Some platforms make you pay all the interest for the loan even you pay it off earlier. There are also many possibilities to pay the lender’s interest every day, week, monthly, end the duration that affects the interest rate.
Crypto loans are either fixed interest rates or flexible loans tied to the supply and demand principle, and Compound and Aave at least offer them to their customers. The pros and cons of the flexible loans are apparent, you can get outstanding deals, and sometimes you pay outrageously much. Nevertheless, they are an excellent option when the markets are right.
Flash loans are a different world to most of us. Its possibilities are endless, but using them and understanding them might be pretty hard.
At the moment, it takes some level. Of understanding of coding, few platforms offer flash loans rebuild forms that you can use for some particular actions.
A Flash loan is a loan that you don’t need any collateral, and you can loan up to 68 million dollars at the time of writing this. Yes, you heard it right, sixty-eight million united states dollar, without any collateral.
Flash loan principle is that there can be only one transaction, but it can include many actions inside, and the last step of the transaction is payback to the Aave pool, with interest, which is of fixed 0.09%.
Here are numbers that show you how huge volumes crypto loans are dealing with today, and there is no end to it. The sky is the limit or not even that. According to the crypto credit report Credmark, in the 2018 loans originated was 1 billion USD, 1.5 billion collateral, 2019 8million USD created loans, 13.5 Billion USD collateral, and growth is staying the same in 2020.
If you are beginning to start to loan or lend, CryptoGandald recommends two different places for you. They are easy to create, support is excellent, best of the best platforms, and very reliable and safe, and last, but not least with my links, you get both from them 20USD just from opening the account. In YouHodler, you don’t even have to deposit anything to get it. Celsius.network you have to deposit 200 USD and keep it there for one month. Not bad interest, yes? You can find both of them Partners We Trust section of my website. Or click either of the pictures below to join them and get the bonus. Merry Christmas
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