In our previous article, we compared traditional banking with crypto platforms in terms of loan conditions and crypto interest rates. The evidence suggests that the bank's APR might be as high as 36% for loans, while crypto lending goes up to 15% and depends on my factors. You can find more info about our research here.
What's the Deal?
A standard business model of the crypto lending platform (P2P) is built around borrowing funds in return for an APY and then lending them to loan seekers.
Crypto platforms usually safeguard themselves by lending out only a portion of funds, not the entire pool, and asking borrowers to provide collateral for the loan.
The collateral amount is calculated using the loan-to-value ratio (LTV). More details about LTV you can find here. Long story short, if your LTV is 50%, you can borrow funds equal to 50% of your collateral value. Say you use BTC as collateral, and BTC is trading at $1,000. If you want to buy 1 Bitcoin, you will need to provide $2000 worth of collateral. But LTVs are different. For instance, CoinLoan offers LTV from 20% to 70%, allowing customers to find the best fit for their loan.
This business model is for sure convenient for good times. But what about market crashes, given that crypto is famous for its crazy volatility? Your LTV will rise to a critical level - for some platforms it might be 60%, for others 70%. If that happens, you will need to add more collateral to keep your funds and avoid liquidation. CoinLoan will automatically notify you at 80% LTV, giving you time to make a decision.
At the end of the day, it all comes down to choosing the right platform to park your assets on. And what exactly does CoinLoan offer? Let's see.
What We Offer at CoinLoan
CoinLoan Instant Loans allow you to borrow cash and hold your assets on our platform.
The figure below shows the assets that we offer for borrowing and their rates valid for 20% LTV. We also are one of the few platforms that provide crypto loans backed by Monero, and we are super proud to give every CoinLoaner that opportunity.
Sounds promising? You can sign up and try our platform for yourself. We'd love to see your feedback, don't hesitate to contact us on our social media and share your opinion on our product and maybe suggestions on how to improve our platform.
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The information provided by CoinLoan (“we,” “us,” or “our”) in this text is for general informational purposes only. All investment and financial opinions expressed by CoinLoan in this text are from the personal research and open information sources and are intended as educational material. All outlined information is provided in good faith. However, we make no representation or warranty of any kind, express or implied, regarding the accuracy, adequacy, validity, reliability, availability, or completeness of any information in this text.