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Power of Lending

Do you want to make more money from cryptos?
Lending cryptocurrencies might be the right approach.
One of the current emerging trends in finance and
blockchain, crypto lending is a form of Decentralized
Finance where investors lend cryptocurrencies to
borrowers in exchange for interest payments
crypto dividends.
Crypto lending platforms usually accept cryptos
and stablecoins.
Let’s have an example.
Imagine that Ramesh has 2 Bitcoins.
He doesn’t want to sell any of it because he’s
confident that prices are going to appreciate
substantially.
Ramesh is also worried that if he does end up
selling his crypto, there’ll be a risk that he ends up
with less Bitcoins when he buys it back at a later
date.
Crypto lending platforms can come to the rescue
here.
Cryptocurrency lending allows you to borrow
physical money (e.g. USD, EUR, CAD) when you need
it.
Typically, Ramesh will be given the opportunity to
use his Bitcoins as collateral, and receive a loan in
stablecoins.
Owing to the volatility of digital assets, he’ll normally
have to “overcollateralize,” meaning he’ll have to
lock up more Bitcoins than the overall value of the
funds he’s receiving.
Once he’s repaid back the loan, plus interest, his
crypto will be returned in full, and he’ll make a
handsome profit if Bitcoin ended up appreciating as
he predicted.
His crypto would only be at risk if he failed to keep
up with the loan’s terms, or if the value of the Bitcoins
held as collateral fell below the value of the loan he
received.
So, for this type of lending to take place, there have
to be three parties involved: lenders, borrowers and
lending platforms.
Lenders and borrowers in cryptocurrency lending are
connected through a third party, an online crypto
lending platform, which acts as a
trusted intermediary between the two.
There are a number of popular lending platforms
where people can lend money to cryptocurrency
investors, hold their cryptocurrency digital assets as
collateral, and create an income stream from the
interest payments of the borrowers.
While cryptocurrency is new, crypto lending is quite
similar to traditional lending.
With a cryptocurrency loan, a borrower typically
offers up their cryptocurrency as collateral to the
lender, who gives them cash or a stablecoin
cryptocurrency that’s tied to a traditional currency,
and charges the borrower interest on the loan.
For most cryptocurrency loans, the lender isn’t a
bank, but another individual investor.
That means an individual can either be a
cryptocurrency borrower or lender.
Crypto lending and borrowing have gained
momentum recently, marking the start of the new
financial era.
Crypto lending enables the lender to remain the
owner of the crypto asset.
Crypto lending helps you get interest on your
cryptocurrencies.
What are your thoughts on the power of lending?
Like, Share & Write in the comments below.
#blockchain #technology #innovation

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