Need a loan?
Hello again and welcome to Crypto Noobs. This is a series where I , a regular dude, show you how to do different shit with crypto. I am not an expert nor am I a financial advisor. I'm your average everyday dude that likes cryptocurrency and blockchain tech. In the last Crypto Noobs I compared some crypto debit cards so please check it out here if that interests you at all. Today, I want to show you how to take out a collateralized crypto loan on xDai or Binance Smart Chain. I highly recommend using xDai because it has fees less than a penny per transaction, and you'll be doing quite a few transactions.
So what is a collateralized crypto loan?
It's exactly what it sounds like. You take some crypto and use it as collateral to get a loan of another crypto. For example, say you have 1 ETH and want to get a stable coin without selling your 1 ETH. Well, you can use that 1 ETH to take out a loan at a small APR to get USDC. Now you have USDC to trade with or do whatever and you haven't sold your ETH. Different platforms offer different crypto and other blockchains do as well.
So, I recommend using SushiSwap as it supports Binance Smart Chain and xDai, 2 blockchains that I use frequently. SushiSwap lets you Lend or Borrow quite a few different cryptocurrencies as you can see. You're able to see how much of each crypto is available to borrow, what you have to use as collateral, and what APR you will pay all on the Borrow page. As xDai is a smaller chain than Ethereum, there wont be as much available for borrowing so if you need higher amounts you can use the Ethereum chain. The amazing part is how low the APR is on some of these loans. As low as 0.25%.
Borrow
When you click on an asset to borrow, you can set how much collateral you want to provide and the rest is pretty simple. Approve the app, approve the assets, and complete your loan. You'll be able to get 75% of the value of your collateral as a loan. This one is a loan at 0.25% APR with BUSD as collateral to get USDC. Why you would do that, I have no idea because you're swapping one stable coin for another but... you do you.
Lend
You can also lend crypto and get a return APR. You're able to see how much is available for borrowing and the percentage lent out already. Each one will have a different APR. There's so many different ways to generate passive income with your crypto, and this one is pretty cool. There's no possibility of impermanent loss like there is with yield farming. Simple process, just enter how much you would like to lend. Approve the app, approve the asset, and approve the transaction.
Create a pool
You can also create a lending pool similar to creating a trading pool. Pick 2 assets, one as collateral and one as the borrowed asset.
Now get to lending!
Peace.
Posted Using LeoFinance Beta
Yay! 🤗
Your content has been boosted with Ecency Points
Use Ecency daily to boost your growth on platform!
Support Ecency
Vote for Proposal
Delegate HP and earn more, by @l337m45732.
thanks for sharing!