crypto lending!
Assalamu Alaikum
Source
Crypto lending is a form of financing that allows a cryptocurrency holder to lend their cryptocurrency to other people in exchange for interest payments. The basics of crypto lending are the same as traditional lending. A key factor where they differ is how the funds are accounted for. This concept is similar to traditional banking. In the traditional case, you lend money to your bank by opening a savings account. Banks use your money. In return, he pays regular interest on your savings and guarantees the safety of your funds.
When it comes to crypto loans, traders can borrow from one week to six months on platforms like Binance Loans.
The reason crypto loans work on such a short time scale is that cryptocurrencies are much more volatile than traditional currencies, making them risky for lenders and borrowers. If the value of a cryptocurrency falls drastically, the collateral a lender takes may be worth much less than what was borrowed. Thus, hourly rates and small loan terms apply.
Source
According to a source, "(In the past few decades, banks have offered interest rates on savings accounts of approximately 2-3% and even significantly higher. In 2022, interest rates on savings accounts will be negligible, in some cases 0,01%).
Similarly, in a DeFi environment, a crypto holder lends crypto to a borrower in exchange for a guaranteed annual interest rate, which in most cases can range from 4% to 12%.
Today's discussion ends here. I hope you find it interesting and able to understand. Share your thoughts on today's topic. Wishes and blessings to all.
Upvoted! Thank you for supporting witness @jswit.
Lending is very necessary in life. Same in cryptocurrency.
Nice to know that crypto lending is a form of financing. Actually I didn't know about this before. Interested to know more such important things from you. Hope you will share with us. thank you very much
https://twitter.com/MahmudulK59125/status/1779729228189282565?t=RWg8_HMw7JQD0Gy1LwvYGw&s=19