Thoughts on Crypto Loans: A Liquid Asset or Something More

[Cointalksmilez]

Ever heard of crypto loans? They're like borrowing money using your cryptocurrency as collateral. It's a bit under the radar in web3, but big players are onto it.

Basically, crypto loans let you get cash without selling your digital assets. That means you can keep your investments intact and avoid taxes.The cool thing? You can use the borrowed money for anything—investing, bills, or even spreading out your crypto investments. Plus, since the loans are backed by collateral, lenders take less risk, offering better rates.
But how do they compare to DeFi loans? Let's dive in and find out.

[Stompix]

Basically, crypto loans let you get cash without selling your digital assets. That means you can keep your investments intact and avoid taxes.The cool thing? You can use the borrowed money for anything—investing, bills, or even spreading out your crypto investments. Plus, since the loans are backed by collateral, lenders take less risk, offering better rates.

They don't offer better rates at all! Take nexo for example:

6. What is the interest rate on my loan?
The loan interest rate depends on your Loyalty Tier, which is determined by the ratio of NEXO Tokens against the rest of your portfolio balance:

Base  – 15.9%
Silver  – 14.9%
Gold  – 10.9%
Platinum  –  7.9%

Those are higher than what my bank charges!

Second, there are risks you don't have with traditional assets, let's assume a flash crash for your coins, if BTC drops to 40k for a day and then back up, you're getting liquidated at 40k and the next day you look at your former collateral being worth 50% more.

Third, the risks, you're giving a platform more money than they give them, so if the platform gets hacked you've lost a lot of money for that loan.

Fourth, remember Celsius??

[Mega Mind]

Ever heard of crypto loans? They're like borrowing money using your cryptocurrency as collateral. It's a bit under the radar in web3, but big players are onto it.

Basically, crypto loans let you get cash without selling your digital assets. That means you can keep your investments intact and avoid taxes.The cool thing? You can use the borrowed money for anything—investing, bills, or even spreading out your crypto investments. Plus, since the loans are backed by collateral, lenders take less risk, offering better rates.
But how do they compare to DeFi loans? Let's dive in and find out.

Actually I first heard of crypto loan when a friend of mine refer me to a crypto exchange back then, but I could't join, because there was no point since I didn't have much funds on me back then, but after I started, I felt it was a thing they do to make crypto have more meaning and bring in more people and make us make a life out of crypto, so if you can trade and spend crypto, you should be able to borrow and lend the same, makes sense right? One concept I eventually liked about crypto loan is the concept on Bitget where they say to avoid liquidation, you can reduce your LTV by depositing more collateral or repaying part of your loan. It makes crypto loan more reasonable and takes away the fear losing all funds due to volatility and just like you have said, it makes life a lot easier and let's have access to assets without losing it all.

[joniboini]

One concept I eventually liked about crypto loan is the concept on Bitget where they say to avoid liquidation, you can reduce your LTV by depositing more collateral or repaying part of your loan. It makes crypto loan more reasonable and takes away the fear losing all funds due to volatility and just like you have said, it makes life a lot easier and let's have access to assets without losing it all.

I don't think that concept is unique to crypto, or Bitget in this case. I've heard similar features on other crypto loan platform, or traditional lending platform who uses collateral. The only difference is probably the flexibility and convenience since you can easily manage your loans through your browser in crypto. Btw, as far as I understand it, it doesn't remove the risk of volatility, you can still lose a lot of money unless you plan on continuously supplying new funds everytime the market is bearish. If anything, crypto loan is riskier since you need to watch out more factors compared to traditional lending platform who use one or two currencies. CMIIW.