Collateralised Lending

What is Collateralised Lending?

● Crypto Lending is executed through DeFi lending applications. ● They allows users to borrow and lend cryptocurrencies for a fee or with interest.

● Due to crypto being decentralized, any user can deposit collateral and instantly get a loan, which they can use to invest.

How does Crypto Collateralised Lending work?

Crypto Lending involves three parties:

● Lender

● Borrower

● DeFi platform

The borrower must provide collateral in order to borrow any crypto. On the other side of the loan, there are smart contracts that mint stablecoins or allow other users to supply crypto for lending. In the latter, lenders add their crypto to a lending pool through a smart contract that manages the whole process and automatically rewards them with a cut of the interest.

Advantages of Crypto Lending

Crypto loans have been used on DeFi for years, and they provide a series of clear advantages:

● Easy, accessible capital. Crypto loans are given to anyone who can provide collateral, which makes the borrowing process easy and fast compared to traditional loans.

● Smart contracts are in charge of managing the Ins and Outs of the whole process, making lending and borrowing easy to scale.

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