At the core of crypto, lending is a fairly simple concept: Borrowers can use their crypto assets as collateral to obtain a fiat or stable coin loan, while lenders provide the assets required for the loan at an agreed-upon interest rate. This can also work in reverse, where borrowers use fiat or stable coins as collateral to borrow crypto assets.
You’ll likely notice nothing groundbreaking here — they are collateralized loans — but credit and lending are powerful financial primitives that open up a wide range of applications and benefits for businesses, institutions, traders, and users. Additionally, in the growing DeFi space, this primitive has been unlocked for permissionless, open and composable lending access. This leads to new use cases like optimized rates across platforms and “flash loans,” in which a user can utilize atomic transactions to borrow up to a platform’s full liquidity as long as they pay it back in the same transaction — but more on that later.
How important is lending in markets?
At a fundamental level, credit and lending markets increase the amount of productive work money does by reallocating it from those without an immediate use case to those with one. This increases the utility of that money for all parties, giving borrowers access to capital and lenders yield.
This is a massive opportunity for crypto markets and users, which have traditionally had two options regarding how to use their crypto: hodl or trade. Particularly for hodlers, cryptocurrency has had one function — i.e., to sit in their wallets. While some may argue that serves a purpose by limiting supply on the market, we can generally agree that it is not a particularly productive use of a capital asset.
With the advent of crypto-asset lending, the utility of those assets has increased significantly. A formerly static investment can now generate passive yield for lenders, and borrowers can
either receive fiat without having to initiate a taxable sales event or receive crypto assets for trading, arbitrage or market-making. These are substantial improvements for individual hodlers and major institutional investors alike.
In addition to these utility improvements, this is also one of the few cases in which crypto provides an improved, direct analogue to the financial system when comparing lending returns to interest savings accounts. At the time of writing, most crypto-lending platforms provide an interest rate of around 8% for lending stablecoins; in comparison, most savings accounts in the United States provide less than a 1% return on the dollar.
While this is a great improvement to the crypto ecosystem, it does not offer the full benefits of true credit — as in their current form, all crypto loans are overcollateralized. This means that you must already have capital at your disposal to receive a loan, which means the crypto-lending market is not “growing the pie.” This is particularly disappointing when it comes to the world’s under- and unbanked populations, who most need increased financial access.
Ethersmart offers flexible loan plans.
By pledging ETM, BTC, ETH, XRP, BNB or USDT, users can borrow ETM on the Ethersmart loan market with service fees just from 3.15%. A single loan can be as low as 500 USD and up to 60.000 USD with four months–twelve months borrowing period, fulfilling most users’ needs for both the loan amount and duration.
As for lenders, if the borrower repays the loan early, they can still enjoy 50% of unexpired interest income. This makes it an attractive alternative to traditional savings accounts with interest rates of close to zero.
Ethersmart launches ETM loan program – a unique opportunity for crypto investors!
With Blockchain technology growing exponentially, more and more people are putting their money in this field since it’s one of the most exciting innovations of our time. It uses the Blockchain technology that also powers cryptocurrencies- the digital alternative to traditional money (or the euros, the dollars, the yen, the pounds, etc.)
One sector that is also benefiting from this technology is finance, and especially the lending side of the industry. It is as a result of blending lending and cryptocurrency that the crypto-lending practice was born.
In a nutshell, crypto-lending is the process of lending digital assets through crypto exchanges or different lending sites with an interest rate.
For the last few years, crypto lending has massed some significant amount of attention and is now increasingly becoming a mainstream conversation in banking as well as institutional investors.
Crypto-assets, or as commonly known cryptocurrency, emerged in 2018 by a pseudonymous person named Satoshi Nakamoto, who invented Bitcoin. With the new invention, more cryptocurrencies were created, including Ethereum and Ethersmart.
Cryptocurrency lending works just like p2p lending, by connecting borrowers to lenders via an online platform. Instead of money, crypto lending trade on cryptocurrencies via a crypto lending platform.
Lenders on crypto lending receive their assets once the borrower repays the loan. Most of the loans are also backed by physical assets like real estate, while others allow users to take loans backed by intangible assets like cryptocurrencies. Crypto lending can differ, depending on the platform, but what remains constant is the core Crypto lending can differ, depending on the platform, but what remains constant is the core concept. A lender makes its assets available to loan at a certain rate.
Ethersmart – the most successful blockchain development platform from Dubai has announced the latest information on the implementation of the ETM loan plan. Accordingly, accounts after completing KYC and confirmed by the company will be classified according to categories (white, green, yellow and red) – KYC confirmation time and color up to 6 hours. Accordingly, the tick colors will be equal to an account’s credit rating.
White – loan contract up to $ 5,000
Green – loan contract up to $ 10,000
Yellow – loan contract up to $ 30,000
Red – loan contract up to $ 60,000
Investors are allowed to place loan orders with a minimum value of 500 $. Accepted digital currencies include ETM, BTC, ETH, XRP, BNB and USDT. With the collateral is ETM, the investor is preferred to borrow up to 60% of the collateral value, while the figure with the remaining digital currencies is 50%.