Ranking as one of our most frequently-asked-questions is: “Can I borrow Bitcoin on your platform?” For some time, we had to answer, “Not yet.” Then, we added stablecoins and expanded our answer to “Not really, but TUSD, GUSD, and USDC are always at your service.”
However, the day has finally come where we can proudly say, “YES!” Yes, you can borrow BTC, ETH, LTC, and XMR in addition to fiat and stablecoins. Moreover, you can borrow BTC against BTC. Sounds strange, but some crypto-maniacs asked us about this financial tool.
Today is a historical moment where CoinLoan has gone beyond crypto-to-fiat lending to enable crypto-to-crypto functionality. The addition of this financing branch on the platform will strengthen the range of capacity for current users and make the platform more attractive for potential ones.
Keep in Mind
- You can now lend BTC as well as ETH, LTC, and XMR.
- You can pay platform fees for borrowing in a loan currency but remember that paying in CLT gives you a 50% discount.
- Deposits are free, and withdrawals are subject to a little fixed platform fee.
How Is the Crypto-to-crypto Lending Going to Work?
In the lending and borrowing logic, nothing changed except that now you can use crypto-to-crypto currency pairs on the CoinLoan lending platform. All cryptocurrencies available in My Wallet can be used both as a loan currency and collateral. Borrowers will have to repay in loan currency.
You can still receive a fiat loan and convert it into the cryptocurrency chosen on the CoinLoan Crypto Exchange. However, this update allows you to skip an exchange step, save your time, and receive the crypto needed in one transaction.
Why Is This Update Beneficial?
CoinLoan provides service that is quite useful for investors and crypto holders, traders and miners, retail customers, and hedge funds.
Now, CoinLoan has altered its business model by adding a new feature. It gives crypto holders another way to make money. Instead of just leaving your coins alone, it is now possible to unlock asset value lending with competitive interest rates. Crypto-to-crypto loans also give users yet another opportunity to implement crypto-trading strategies based on assets that the trader does not own, such as leveraging or short selling.
For instance, let’s take a hypothetical example to see how short selling works. This strategy requires two factors: a borrowed cryptoasset and your expectation that this asset is going to decline in price. Suppose, you predict that ETHs price will decline in the short term. Here, you can borrow ETH and sell it while the price is high to later buy them after the price has dropped.
There’s not a lot of time to take action, so you decide to go to the CoinLoan platform to borrow 1,000 ETH against your BTC. You’ve done the transaction almost instantly and paid 10 ETH as a 1% platform fee.
Let’s say that the cost of one ETH is $250. Next, you sell your 1,000 tokens for stablecoins before prices fall to get 250,000 TUSD. After the expected drop in prices happens, you repurchase ETH.
If your predictions come true and ETH went down, let’s say to $238 per one ETH, you just hit the lottery. For 250,000 TUSD, you can now buy 50 ETH more, totaling 1,050 altogether.
Even when taking into account that the interest rate will cut approximately 15 ETH, you still make a profit. Well, what if you borrow not one but 10,000 or 100,000 ETH?
Try CoinLoan’s new lending feature and let us know what you think. We’d love to hear from you!😊