For those who are more crypto-literate, over-collateralised loans can provide a quick and easy-to-access way to leverage crypto investments during a bullish market.
For example, an investor could use a protocol such as Maker to deposit 10 Ethereum tokens, take out a stablecoin loan of up to 66% of their initial deposit, and then use these dollar-pegged crypto coins to buy 6 more Ethereum tokens.
If the price of Ethereum continues to go up, this process was a winner. If the price of Ethereum drops, then the initial collateral amount starts to get eaten up, which is why it’s always wise to post a collateral much lower than the maximum amount available. That way, when the price starts to drop, you can shore up your loan by adding more ETH (or in the case of Maker, ETH-based stablecoins) on top of it.
You can register at https://blocksafecrypto.com/private-registration/ and get instant help from our #crypto experts for free!
