Loan Type

1. Collateral : In a crypto loan, borrowers pledge their cryptocurrency assets (like Bitcoin,
Ethereum, etc.) as collateral to secure the loan. The amount of the loan is typically a percentage
of the value of the cryptocurrency being used as collateral.

2. Lending Platforms : Crypto loans are facilitated by various online lending platforms or
decentralized finance (DeFi) protocols. These platforms match borrowers with lenders and
handle the loan process, including collateral management and repayment.

3. No Credit Checks: One of the key advantages of crypto loans is that they often don’t require
credit checks or extensive paperwork. This makes them accessible to individuals who may not
qualify for traditional loans due to credit history or lack of financial documentation.

4. Interest Rates and Terms: Interest rates on crypto loans can vary widely depending on the
platform, the amount borrowed, and the duration of the loan. Generally, interest rates tend to be
higher than traditional loans due to the volatility and risk associated with cryptocurrencies.

5. Risk of Liquidation: If the value of the collateral drops significantly, borrowers may face the
risk of liquidation, where the lender sells the collateral to recover the loan amount. To mitigate
this risk, borrowers often need to maintain a certain loan-to-value (LTV) ratio, and lenders may
issue margin calls if the ratio exceeds a certain threshold.

6. Use Cases: Crypto loans can be used for various purposes, including leveraging crypto
assets for liquidity without selling them, funding investments or business ventures, and
avoiding capital gains taxes that would result from selling cryptocurrency.

7. Regulatory Considerations: The regulatory environment surrounding crypto loans varies by
jurisdiction. Some countries have specific regulations governing crypto lending platforms, while
others may have no regulations or guidelines in place.