The loan is settled the moment you take it out. So the protocol has been paid and holds your collateral (they have been paid way more than what they are loaning out). It just makes it much nicer of a deal since there is no liquidations or interest.
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You mean money is invested a lot on them so they can afford to offer interest free loans without liquidation. good to hear its sweet and they are covered
If you give me 2 dollars as collateral... and I give you a loan of a dollar and hold the other dollar... when you come to collect and give me the dollar back... I will have the 2 dollars to pay you back.
Thats sweet!!! thanks for putting it this way I so I see it this way!!
That is not how it works.