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Since the pandemic the crypto market has shown tremendous growth, attracting millions of investors around the globe.
Many investors view a huge scope in the crypto market, but there comes a problem when physical money is needed.
A lot more investors expect to yield from the long-term price increase,
but at the same time; they would like to gain some value while doing so.
This is made possible by holding cryptos while spending physical currencies such as USD, EUR, CAD, etc with the help of crypto lending.
Because of this reason many new investors are also beginning to invest in cryptos as a crypto investor
can generate passive income by lending cryptocurrency.
Using the Crypto lending method, crypto holders can borrow physical money while investors will lend their cryptocurrency
in return for a good interest. Some will already know this concept as bitcoin lending but, since the concept of lending is now applied to other cryptos too;
it is now coined as crypto lending. Cryptocurrencies such as ETH, ADA, BNB, XRP, LTC, etc can also be used for lending!
What is Crypto Lending?
Crypto Lending is one of the trending concepts in the crypto ecosystem.
It is a form of decentralized finance that enables the investor to lend cryptocurrencies to the required borrowers in exchange for some interest
which can also said a crypto dividend of the lender. Those platforms that support crypto lending will also usually support cryptos and stable coins.
How does it work?
Both the lenders and borrowers in cryptocurrency are usually connected via a third party in a crypto lending platform making it more trusted.
Majorly three parties are involved in this including lenders, borrowers, and lending platforms.
Investors or Lenders- These are the people who would like to lend their cryptos.
They could be waiting for the rise in the crypto value, meanwhile, if they like to get some interest by lending, they can do so.
Crypto Lending Platform- Helps in facilitating the lending and borrowing processes.
Many decentralized platforms, autonomous platforms as well as centralized platforms operate these.
The borrowers- Are those who are looking to obtain crypto funds based on your requirements.
They can be either the individual or an institution looking for fundings.
Types of Lending Platforms
There are two major types of crypto lending platforms including Automated and Manual ones.
In automated lending platforms, the lender can generate dividends as soon as the asset is deposited in the wallet.
While in manual ones, the lender needs to manually stake a certain amount to start generating dividends.
Step by Step Process
Crypto loan requests are made by the borrower on the platform.
When the request is accepted by the platform, the borrower will be able to stake his crypto collateral.
Until the borrower funds all his loans he/she won’t be able to get back the stakes.
The lenders will fund loans automatically on the platform.
This process is invisible to the lenders whose crypto balance will be unchanged.
On a weekly or monthly basis, the interest will be paid to the investors.
As the borrower pays back the loan, the crypto collateral will be given back to him.
This concept of lending is completely different in each platform, but the general concept will be the same for all platforms.
Some platforms make all these processes much safer with the use of smart contracts.
Endnotes
If you hold a good amount of cryptos but don’t like to sell them, then crypto lending could be your best choice and is worth considering.
This is one of the inexpensive and fastest methods and it doesn’t require a credit check.
So, if you plan to hold on to digital assets for a longer period you can lend them and maximize the value easily.
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Eclipton, the best source of cryptocurrency exchange cum social media platform can also help you lend your cryptos
and earn from it. Why wait? Sign up today.
Website: Eclipton
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Twitter: https://twitter.com/eclipton_com
