In that case, a Margin Call is issued, notifying you to restructure your loan agreement by adjusting your loan-to-value ratio. Suppose the value of your borrowed funds grows or collateral happens to lose value so that the LTV reaches a 75% ratio. Margin Call – As everyone is well aware, crypto assets are prone to considerable price volatility.Although rates may vary, Binance is offering a 65% LTV as a rule of thumb. If you are willing to use 1 BTC as collateral at 65% LTV, for example, you can borrow crypto assets that amount up to 0.65 BTC in value. Initial LTV – The ratio between the value of a loan and the value of the collateral.Binance offers five loan durations: 7, 14, 30, 90, and 180 days. Loan Term – Time duration of the loan agreement.If you are borrowing BTC by staking BUSD, for example, then BUSD is considered collateral. Collateral – An asset with which a borrower secures the repayment of a loan.To clarify, if you borrow 1 BTC, for example, then your principal is 1 BTC. Principal – The original sum of borrowed funds.Here are short summaries of the most important technical terms that you need to be familiar with before using Binance Loans: If you have never used crypto loans before, you are likely to be unfamiliar with technical terms that underpin the process of using the Binance Loan service. Understanding key Binance Loans terminology More avid cryptocurrency users will be happy to find lesser-known altcoins, such as Curve DAO Token ( CRV) and 0x ( ZRX), among supported assets. No taxes – Since borrowing funds doesn’t require making a fiat withdrawal, you incur no taxes on your crypto assets as they are not registered as taxable events.Ħ0+ loanable currencies, 25+ collateral assets to pick from – You can choose from a long list of supported digital currencies, including major cryptos such as Bitcoin ( BTC) and Ethereum ( ETH). Ideal for short-term liquidity needs – Binance Loans are a perfect solution for increasing your short-term exposure to crypto markets as they feature five loan terms: 7, 14, 30, 90, and 180 days. You only need crypto in your spot account to use as collateral and a verified account, and you are good to go. No credit score needed – As opposed to obtaining a loan from a bank, which requires a ton of paperwork and can be very discriminatory if your credit score is low, Binance borrows funds at the same rates to all clients. As an added bonus, Binance charges no fees for digital currency transactions associated with its loan service. Additionally, you can use your loaned funds outside the Binance platform if you so choose.Īttractive interest rates and no transaction fees – Rates vary depending on assets used however, they rarely amount to more than 0.06% per day. You are free to do whatever you want with them, as opposed to when using Binance Margin, which also provides the ability to borrow up to five times your collateral, but restricts the use of borrowed funds to strictly trading purposes. They are as follows:įast and easy to use – Binance Loans service is highly accessible, near-instantaneous, and provides excellent transparency when it comes to interest rate fees, repayment process, and loan-to-value ratios.īorrowed funds are yours without any strings attached – Borrowed crypto assets are deposited to your spot account. Several essential properties make Binance’s loan offering stand out as one of the best in the market. With the quick breakdown behind us, let’s examine Binance Crypto Loans financial service in more detail. No fiat borrowing or collateral options.Margin Call limit and Liquidation LTV are relatively close in value.The maximum loan term duration is capped at 180 days.
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