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??