Exchange Lending might be a way to reduce unnecessary Defi fee

[Saucemann]

Hey everyone, I'm curious about crypto loans and how they work, but I'm a bit confused. From what I understand, you can use your cryptocurrency as collateral to borrow other types of crypto, and you have to pay interest on the borrowed amount. I've also heard that they require "over-collateralization," which is pledging more crypto than the value of the loan to reduce risks.

I also came across some info saying that crypto loans are different from DeFi lending because they have fixed interest rates, don't require extra crypto addresses, and don't have gas fees. Plus, the borrowing process is supposed to be simpler.

Can anyone explain if I'm on the right track? How do crypto loans actually work, and what should I watch out for? Any tips or personal experiences would be really helpful. Thanks!

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[kotajikikox]

Can anyone explain if I'm on the right track? How do crypto loans actually work, and what should I watch out for? Any tips or personal experiences would be really helpful. Thanks!

Yes you are actually on the right track already and pretty much things you said are all there is. Choose a platform, deposit your collateral then input and specify how much you want to borrow and of course how long will it be for you to pay it. The key here is to choose carefully. You want a trusted and established platform to use and beware of scams.

[Orpichukwu]

One thing I understand about getting a loan from an exchange is that you need to have an asset (a token or coin) that is listed on that exchange before you can deposit and use it as collateral because they need to verify and determine the value of that collateral before they can give that loan to you.
 
Secondly, you also need to get up to a certain level, either by KYC verification or whatever their requirements might be, before you can also be approved to make use of the loan option. As for the DeFi loan part, I have not paid much attention to it.

[Bournesparks]

Hey everyone, I'm curious about crypto loans and how they work, but I'm a bit confused. From what I understand, you can use your cryptocurrency as collateral to borrow other types of crypto, and you have to pay interest on the borrowed amount. I've also heard that they require "over-collateralization," which is pledging more crypto than the value of the loan to reduce risks.

I also came across some info saying that crypto loans are different from DeFi lending because they have fixed interest rates, don't require extra crypto addresses, and don't have gas fees. Plus, the borrowing process is supposed to be simpler.

Can anyone explain if I'm on the right track? How do crypto loans actually work, and what should I watch out for? Any tips or personal experiences would be really helpful. Thanks!

I believe you're on the right track coming here. I'll suggest reading this. https://www.bitget.com/academy/introducing-bitget-crypto-loan-for-smart-financing, but you'll need to have some collateral

[Kelward]

I've been hearing about crypto loan and I wonder why someone will want a crypto loan, perhaps to use it to invest in a project or as a digital cash, the concept is still quite confusing to me.

My question is what will a person use the crypto loan for? Considering that cryptos are very volatile, it's very easy to lose your funds in a scam project or a shitcoin, unless the person is perhaps buying Bitcoin with the loan. I'll appreciate clarification on the essence of crypto loans.

[AVE5]

One thing I understand about getting a loan from an exchange is that you need to have an asset (a token or coin) that is listed on that exchange before you can deposit and use it as collateral because they need to verify and determine the value of that collateral before they can give that loan to you.
 
Secondly, you also need to get up to a certain level, either by KYC verification or whatever their requirements might be, before you can also be approved to make use of the loan option. As for the DeFi loan part, I have not paid much attention to it.

In addition to it is that you must be qualified for with a reputational personality which covers the ranges to define your worth.
So it's usually a transparent transaction deal so that others can either take note Incase of any drastic actions of by anyway the borrower messes up or how the borrower can be remarked with commendations of reputable deal

[cryptoaddictchie]

My question is what will a person use the crypto loan for? Considering that cryptos are very volatile, it's very easy to lose your funds in a scam project or a shitcoin, unless the person is perhaps buying Bitcoin with the loan. I'll appreciate clarification on the essence of crypto loans.

Some known users make it triple or more as long as you know how to dig on good profitable defi section. Like example the LRT some borrowed eth on some  defi platform and uses it to supply to a potential airdrop. By this way he/she are using a borrowed money to earn money if the airdrop materialize he/she can pay the loan and keep the interest.

[johnsaributua]

I admit that defi is more crowded even though cex is also not inferior in providing benefits, indeed from the exchange slipage is more expensive and crowded queues sometimes fail and fees are still deducted, but it can be said that if cheque gives 300% APY in cex only tens of%. Asa only likes to explore defi with a large amount of capital even though he is new, and makes cex as a shelter. Another goal when getting capital and trading well even though altcoins and cex look queues including market segments.

In fact, lending also has a significant effect if the altcoin you choose is not right, for collateral prioritised using crypto with a large community, including usdt, bitcoin, bnb and eth, because that's what I have sometimes.

Defi new / dex we know that they have no legal umbrella and there is no force to come, if the profit will certainly harvest more and vice versa, if you get losses including drain, of course it is fully borne by the wallet owner. While I think cex is safer and there is a complaint service, it depends on choosing cex and coins that are worthy of long-term holding while using the lending feature. All there are options for choice including benefits and profits that have the potential to get it.

[tygeade]

I admit that defi is more crowded even though cex is also not inferior in providing benefits, indeed from the exchange slipage is more expensive and crowded queues sometimes fail and fees are still deducted, but it can be said that if cheque gives 300% APY in cex only tens of%. Asa only likes to explore defi with a large amount of capital even though he is new, and makes cex as a shelter. Another goal when getting capital and trading well even though altcoins and cex look queues including market segments.

In fact, lending also has a significant effect if the altcoin you choose is not right, for collateral prioritised using crypto with a large community, including usdt, bitcoin, bnb and eth, because that's what I have sometimes.

Defi new / dex we know that they have no legal umbrella and there is no force to come, if the profit will certainly harvest more and vice versa, if you get losses including drain, of course it is fully borne by the wallet owner. While I think cex is safer and there is a complaint service, it depends on choosing cex and coins that are worthy of long-term holding while using the lending feature. All there are options for choice including benefits and profits that have the potential to get it.

I believe that we can't really make that much of a big deal from this type of thing, because we don't really have enough data how the long term will be so we just need to wait it out. I am not going to end up using the lending feature some more, because while it does get a lot of users interested, the money there is not really that big just yet.

I think it has to establish stronger. Leverage/Margin trading is the only way to go and that's what I think people could see in the end that it could grow to be something huge, and when that happens then we are going to end up with a lot bigger. We should probably consider what we can make with these situations. I hope that we can consider the problem as something we could benefit from the situation as greater in the end.

[jrrsparkles]

Crypto loan and DeFi doesn't makes sense at all as long as crypto is considered as assets since we pay taxes to the profits of cryptos and paying more in the name of centralized is just extra burden. I feel why not simply sell the crypto and get money you actually have instead of going through this process.

[DarkState]

Cryptocurrency prices are always fluctuating. So how do lenders and borrowers handle these fluctuations while taking crypto loans? I mean if a borrower needs $100 worth of Dogecoins and after taking the loan and giving the collateral, he sees that the price of Dogecoins has dropped to $80. Then who will take the responsibility for this price decrease, the lender or the borrower?

[peter0425]

I feel why not simply sell the crypto and get money you actually have instead of going through this process.

I can think of a few reasons why one might prefer taking a loan and using the crypto they have as collateral rather than just selling that very crypto. It is the same reason people take loans in fiat: they do not have enough or that money is meant for somewhere else.

Maybe they need more crypto for something else, and it cannot wait until they have made enough profit from either holding or trading the crypto

[jrrsparkles]

I feel why not simply sell the crypto and get money you actually have instead of going through this process.

I can think of a few reasons why one might prefer taking a loan and using the crypto they have as collateral rather than just selling that very crypto. It is the same reason people take loans in fiat: they do not have enough or that money is meant for somewhere else.

Maybe they need more crypto for something else, and it cannot wait until they have made enough profit from either holding or trading the crypto

If the money is actually needed for something else then giving it as collateral is big risk and there are lots of benefits of we take loan in Fiat than crypto.

Fiat depreciate due to inflation so one who got loan will be the only person can be benefited due to inflation cause they pay less compared to what they used to be assuming the earning increased close to the inflation rate.

[johnsaributua]

I admit that defi is more crowded even though cex is also not inferior in providing benefits, indeed from the exchange slipage is more expensive and crowded queues sometimes fail and fees are still deducted, but it can be said that if cheque gives 300% APY in cex only tens of%. Asa only likes to explore defi with a large amount of capital even though he is new, and makes cex as a shelter. Another goal when getting capital and trading well even though altcoins and cex look queues including market segments.

In fact, lending also has a significant effect if the altcoin you choose is not right, for collateral prioritised using crypto with a large community, including usdt, bitcoin, bnb and eth, because that's what I have sometimes.

Defi new / dex we know that they have no legal umbrella and there is no force to come, if the profit will certainly harvest more and vice versa, if you get losses including drain, of course it is fully borne by the wallet owner. While I think cex is safer and there is a complaint service, it depends on choosing cex and coins that are worthy of long-term holding while using the lending feature. All there are options for choice including benefits and profits that have the potential to get it.

I believe that we can't really make that much of a big deal from this type of thing, because we don't really have enough data how the long term will be so we just need to wait it out. I am not going to end up using the lending feature some more, because while it does get a lot of users interested, the money there is not really that big just yet.

I think it has to establish stronger. Leverage/Margin trading is the only way to go and that's what I think people could see in the end that it could grow to be something huge, and when that happens then we are going to end up with a lot bigger. We should probably consider what we can make with these situations. I hope that we can consider the problem as something we could benefit from the situation as greater in the end.

 You are right, it is indeed better to have your own money without the burden of returning even though the assets of the lender are still intact, the current halving season in my opinion is a condition where lending can be a solution of choice sir, where I don't want to let go of crypto that is rising and is making a rare bearish trend in a 5-year time curve, even so lending at this time in my opinion is not new and people are almost not appetite to pawn their crypto there and are more confident in their decisions. Because there are times when scalping post halving can get more for than holding and stake, depending on the taste in dealing with this, but I also do what you say.

[Stablexcoin]

One thing I understand about getting a loan from an exchange is that you need to have an asset (a token or coin) that is listed on that exchange before you can deposit and use it as collateral because they need to verify and determine the value of that collateral before they can give that loan to you.
 
Secondly, you also need to get up to a certain level, either by KYC verification or whatever their requirements might be, before you can also be approved to make use of the loan option. As for the DeFi loan part, I have not paid much attention to it.

It is true that the exchange won't be able to grant loans to anyone without having some personal information about them. But isn't this supposed to be decentralized and since some people would love to keep their identity secret it is better that the only thing that would make someone eligible for a loan in exchange should be that the person has traded an x amount on the exchange and that he has a coin or token worth equal or more than the amount he wants to borrow in the exchange.

[Bureau]

If you are a trader than crypto loan can be a beneficial for short duration. Other than that they are not profitable as aprt from the collateral a borrower needs to pay high interest on the loan amount. I don't think it is beneficial for anyone who is interested in a crypto loan for personal usage.

[doomloop]

Crypto loan and DeFi doesn't makes sense at all as long as crypto is considered as assets since we pay taxes to the profits of cryptos and paying more in the name of centralized is just extra burden. I feel why not simply sell the crypto and get money you actually have instead of going through this process.

Crypto is a currency but it was only some people who thinks that it is also an asset. When it comes to crypto taxes, there are still some who are exempted to this. Introducing more services like these Crypto loan and DeFi in our space here is actually beneficial because there is no need for us to deal with fiats anymore and it's an added attraction to the cryptos helping them became more known.

The reason why a crypto user will use a crypto loan is because they are not planning to liquidate their cryptos yet because they believe that it will be more valuable in the future. The process for crypto loans is only quick and easy anyway. This is one of their advantages compared to the traditional loans outside.

[jrrsparkles]

Crypto loan and DeFi doesn't makes sense at all as long as crypto is considered as assets since we pay taxes to the profits of cryptos and paying more in the name of centralized is just extra burden. I feel why not simply sell the crypto and get money you actually have instead of going through this process.

Crypto is a currency but it was only some people who thinks that it is also an asset. When it comes to crypto taxes, there are still some who are exempted to this. Introducing more services like these Crypto loan and DeFi in our space here is actually beneficial because there is no need for us to deal with fiats anymore and it's an added attraction to the cryptos helping them became more known.

The reason why a crypto user will use a crypto loan is because they are not planning to liquidate their cryptos yet because they believe that it will be more valuable in the future. The process for crypto loans is only quick and easy anyway. This is one of their advantages compared to the traditional loans outside.

We can't deny that most of the crypto user consider crypto asset than as currency and also crypto to crypto transactions are considered as taxable even unless it's actually done p2p without using any KYCed centralized platform.

Defi can be good thing for short term loans and who don't want to liquidate their cryptos but in long term the security of our collateral is highly risky compared to the traditional finance lending system, maybe in future things may be worked on it's way according to how things turns out.

[batang_bitcoin]

Most of the defi platforms that have a service to give loans to their users aren't going to survive, do a research about how many of them bitten the dust.
As for exchange going for lending, it's very easy to them to sustain this kind of service. Just like the banks, their users deposits are the ones that are being lent to their lenders but about the overcollaterization, it's needed for them to sustain it. Because if they're not going to ask for it, for sure they'd be bankrupt in no time.

[tsaroz]

Hey everyone, I'm curious about crypto loans and how they work, but I'm a bit confused. From what I understand, you can use your cryptocurrency as collateral to borrow other types of crypto, and you have to pay interest on the borrowed amount. I've also heard that they require "over-collateralization," which is pledging more crypto than the value of the loan to reduce risks.

I also came across some info saying that crypto loans are different from DeFi lending because they have fixed interest rates, don't require extra crypto addresses, and don't have gas fees. Plus, the borrowing process is supposed to be simpler.

Can anyone explain if I'm on the right track? How do crypto loans actually work, and what should I watch out for? Any tips or personal experiences would be really helpful. Thanks!

You are right. About the over-collateralization, even the traditional banks have always operated in over-collateral, it's always less than 80% of the valuation of whatever collateral you may put. The percentage can be higher or lower depending on the nature of collateral like it's gold or a car. The excess value of collateral is for the depreciation, expenditure in liquidation process and other legal expenses.
In matter of crypto and stocks, it's decrease in price. And as Crypto are much volatile, you need to put a large collateral in order to take loans. Lesser the collateral, more are the chances of liquidation and for something that aims to profit from banking, liquidating is not their top priority as it might make them lose customers. Crypto loans are often taken by active traders that plans to make profit on their idle money.