A New Dawn of Blockchain Lending with Nolus
DeFi has made significant progress towards being a blockchain-based tech offering a system of financial rails parallel to traditional financial infrastructure.
To scale up the digital innovation ecosystem and give new momentum to fintech, financial projects are figuring out how to integrate next-gen technology with finance. New technologies like 5G, cloud, big data, and AI are forging new paths in finance by leading humanity into a new era – from connecting individuals through connecting things to developing a fully connected, intelligent world. As the world enjoys these intelligent systems and smart homes, the finance sector is reaping from intelligent computing and automation capabilities through blockchain technology.
Blockchain birthed decentralized finance (DeFi), an emerging and exciting financial technology giving centralized finance a run for its money. DeFi is building the future of finance through a new and innovative financial infrastructure, stepping away from the existing financial one used by traditional finance (TradFi).
DeFi is on an upward trajectory, with new financial models coming up in this ecosystem each day. Thanks to DeFi, we have investment tools such as liquidity mining, staking, and DeFi Loans. Decentralized exchanges, among others. How is DeFi able to maintain this growth path?
Decentralized Finance as an Ever-changing and Ever-growing Space
DeFi is a blockchain-based technology spearheading foundational change in finance through the facilitation of entirely new financial products and services that reduce the reliance on legacy gatekeepers and TradFi industry stakeholders. Let us briefly explore DeFi’s transformative effect on finance today.
DeFi Lending/borrowing and DeFi Staking
One of DeFi’s most common use is in protocol-specific money markets. Users can borrow, lend, and stake crypto assets by providing liquidity to a chosen protocol in different types of collectivized liquidity pools.
One issue in DeFi lending that most investors are wary of is the over-collateralization of digital assets. Over-collateralization raises the question, why don’t users receive the amount similar to what they provide as collateral? The answer to this is that protocols need to be kept safe so that they don’t become insolvent and because of this need for safety, the said protocols offer over-collateralized loans. Under-collateralized loans do, in fact, exist as an alternative. They ease burden for borrowers and allow lenders to get more for their provided liquidity due to higher utilization levels. Under-collateralization is preferred as it is more user-centric and offers better financial efficiency.
Currently on-chain under-collateralization too comes with a few trade-offs such as some implementations relying on trusting the borrowers leading to the protocols whitelisting only certain borrowers or even restricting the eligible set of both lenders and borrowers. Such a solution is not permissionless and to rid the lending ecosystem of this hurdle, Nolus goes a notch higher by:
- Making it possible for the borrower to get more than they provide;
- Coming up with an entirely permissionless feature where no restrictions exist on who can be a lender or borrower.
Decentralized Exchange Platforms
A Decentralized exchange (DEX) is a peer-to-peer marketplace connecting crypto buyers and sellers that is non-custodial, i.e., a user remains in control of their private keys when transacting on a DEX platform. Since no central authority controls DEXs, the platforms deploy smart contracts that self-execute as per their set conditions and record each transaction to the blockchain.
In addition, we have standalone DeFi projects with novel technologies built within themselves that are changing the finance scene in their own right. One of these projects is the Nolus Protocol, bringing the world’s first DeFi Lease to decentralized finance.
The Nolus Protocol Pioneering Innovative Changes to DeFi
As an upcoming Web3 financial suite, Nolus comes up with innovative money-market approaches with their unique lease solution to further revamp the DeFi space. They have an inclusive, intuitive, and easy-to-use solution to empower mainstream adoption of DeFi. The goal is to merge TradFi and DeFi using a holistic approach that leverages different financial tools and the advantages that decentralized finance brings to the table.
Leasing/lending on Nolus
The protocol incorporates traditional lease financing into DeFi Leasing by bringing a solution that most people are used to – buy now, pay later. Without requiring users to be finance experts, they can secure a larger amount of a desired digital asset than their current equity balance without worrying about hard margin call formulas or complex lending fee structures.
Fiat on ramping is a proposed part of the Nolus DeFi lending mechanism, a work-in-progress really, where users can exchange fiat currencies for crypto. Upon launch, users would be able to take advantage of this DeFi Lease solution. When the fiat on-ramping comes to fruition on Nolus, users can transfer fiat or crypto from a bank account/debit/credit card/ crypto-enabled wallet, make a down payment in the amount desired, and approve the smart contract.
With the Nolus Defi Lease, users have the full freedom to customize the parameters of the on-chain contractual agreement.
Some key features of the DeFi Lease include:
- Financing up to 150% on the initial investment.
- 40% lower liquidation rates compared to the market average.
- Total costs of financing and transactions are low.
- Asset ownership lies within the user.
- Self-repaying loan mechanisms.
Integrating Divergent Finance Services into one Platform Contributes to the Growth and Adoption of DeFi
The wide-scale proliferation of DeFi technologies, such as the Nolus Protocol discussed above, gives rise to a new paradigm of financial products and services leveraging blockchain and tokenized digital assets. Users can use DeFi as an investment tool to access other financial instruments such as lending, staking, derivatives trading, borrowing, or even Nolus’ novel DeFi Lease solution.
To learn more about Nolus and its unique products and services, visit their socials:
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5 Facts About Cryptocurrency Lending Worth Knowing
Become informed about important facts regarding cryptocurrency lending including the types of crypto-loans and the risks involved.
Cryptocurrency Lending Facts You Should Be Aware Of
The cryptocurrency lending industry has really taken off in the last couple of years. For lenders crypto-loans offer a good return on their digital assets and they benefit borrowers by providing them with funds without having to sell their cryptocurrency holdings. There are numerous sites online where both borrowers and lenders can find services with instant Bitcoin loans as well as for other cryptocurrencies.Â
Some people consider getting a crypto-loan to be pretty much the same as acquiring a loan from a bank. However, while there are some similarities, there are some differences between crypto-lending and traditional lending. For those not familiar with cryptocurrency lending we have provided some facts about the service.
There Are Two Main Categories of Cryptocurrency Loans
There are two main categories that cryptocurrency loans will fall into; centralized loans, also known as custodial or CeFi loans and decentralized or DeFi loans.Â
With centralized loans the lending platform sets the loan terms and interest rates. Borrowers and lenders must go through a KYC verification process. The lending platform will also have access to the user’s private keys. Loans from centralized platforms can be in cryptocurrency, stable coins or fiat currency. Interest rates tend to be lower on centralized loans and the lending platform is more user friendly.
Decentralized loans are managed by smart contracts. The lender sets the interest rates and it is up to the borrower whether or not they accept. Interest rates on DeFi loans will generally be higher. Both borrower and lender maintain control of their cryptocurrency assets but if a loan payment is missed, the lender can take action against the borrower’s account. Loans from DeFi platforms can be in cryptocurrency or stable coins but not fiat currency.
Cryptocurrency Loans Don’t Require a Credit Check
Anybody who has ever applied for a loan from a bank knows that there is a huge amount of paperwork involved which includes an extensive credit check. This is not the case with cryptocurrency loans. Users of centralized crypto lending platforms will have to complete a KYC verification process but there is no credit check. DeFi platforms don’t even require users to complete the KYC process.
The only requirement to qualify for a crypto-loan is to provide the necessary collateral. Once the borrower provides the collateral, loan approval is complete in anywhere from a few minutes to a few hours depending on the particular platform.
Be Familiar with the Loan to Value (LTV) Ratio
The Loan to Value or LTV ratio determine how much collateral a borrower must provide and along with the type of cryptocurrency used as collateral and the length of the loan term influences interest rates.
LTV is the amount of the loan divided by the amount of the borrower’s collateral. For example, if a loan of $1000 requires collateral worth $2000 the LTV is 50%.
- $1000 (loan amount) / $2000 (collateral) = 50% (LTV)
To determine the amount of collateral required for a loan multiply the amount of the loan times the LTV.
- $1000 (loan amount) x 50% (LTV) = $2000
Cryptocurrency loans are generally always over-collateralized meaning that the amount of collateral will be higher than the amount of the loan. Depending on the lending platform, the LTV will range from 20% to 90%. The lower the LTV the lower the amount of interest that will be charged.
Not All Cryptocurrencies Are Eligible as Collateral
There are around 20,000 different cryptocurrencies with over 10,000 of those being active. However, most lending platforms will only accept a small number of these as collateral for a cryptocurrency loan. Most platforms will accept the popular cryptocurrencies like Bitcoin, Ethereum, Litecoin and a number of others. A number of stable coins such as Tether, USD Coin and Binance USD are also widely accepted. Some lending platforms accept as many as 50+ different cryptocurrencies and stable coins as collateral while others only accept 4 or 5. If you are holding a somewhat unknown cryptocurrency, you may have a difficult time finding a platform that accepts it or may even have to trade it for a different digital coin.
There Are Some Risks Involved with Cryptocurrency Lending
Those considering becoming involved with crypto-lending should be aware that there are some risks involved. Cryptocurrencies are volatile and borrowers may be subject to margin calls if they experience a drop in the value of their collateral and the LTV dips below that agreed on.Â
There is also little or no regulation of the crypto-lending industry. The level of regulation depends on your location. For example, crypto-lending in the U.S. may be somewhat different than that in other countries. Without the strict insurance requirements imposed on traditional banks by regulation, lending platforms can be subject to problems like those recently experienced by Celsius who was forced to pause all account withdrawals.
Cryptocurrency lending can be a great tool in your investment strategy but make sure to do your research first.
Disclaimer: This is a guest post. Coinpedia does not endorse or is responsible for any content, accuracy, quality, advertising, products, or other materials on this page. Readers should do their own research before taking any actions related to the company.
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Game-Changers In Cardano Decentralized Lending
Instant access to capital is the foundation of all innovation in DeFi. Liquid cash loans fuel the dreams of visionaries who dare to initiate change and drive technological progress forward.Â
Luckily, with the Vasil hard fork, the same financial opportunities are now available on the Cardano ecosystem. Bonds.org is a pioneer of decentralized lending, empowering Cardano enthusiasts to take full advantage of censor-proof lending and borrowing opportunities.
Decentralized lending at Bonds.orgÂ
The value of decentralized lending for the future prosperity of the industry should not be underestimated. As the gateway to liquidity on Cardano, Bonds.org offers accessible, low-cost financing to borrowers in need of liquid loans. Borrowers can borrow without the need to liquidate their crypto assets; lenders can earn a substantial interest rate for meeting the liquidity needs of others.Â
DeFi lending is the safe option for your liquidity needs since there are no security risks associated with the human factor. Borrowing and lending processes on Bonds.org are streamlined for maximum efficiency and users do not need to give away control of their assets or share personal information with the involved parties. Since no centralized authority is involved in the day-to-day movement of funds, all transactions are censor-proof and cannot be denied arbitrarily.
 Bonds.org fills the demand gap in this new ecosystem, upping the game for all other new players within this space. With years of experience in the industry and drawing on the best practices from other projects, Bonds.org knows exactly what the market demands and introduces features that are lightyears ahead of the competition.
Bonds.org founding team boasts an incredible track record within the Cardano ecosystem, having already delivered enormously profitable projects – including the VC-less launch of a DEX – completely from scratch. Now, the team has taken advantage of the latest crypto winter to work on a truly innovative product. Once the ecosystem picks up speed, Bonds.org is destined to become the go-to place for instant lending and borrowing opportunities – a non-custodial gateway to Cardano liquidity.
The team has already secured strong partnerships with leading ecosystem launchpads, stable coins, and other prospective partner projects. Thanks to the team’s wealth of experience, know-how, and knowledge of best industry practices – Bonds.org is bound to amplify the prosperity of all market participants within the Cardano ecosystem.
Bonds.org has just entered the Private Sale stage for early adopters which, for more information and ability to enter this sale, please reach out to [email protected]
Early adopters will also receive a legacy NFT commemorating the investment which will allow reduced platform fees post launch!
To explore decentralized lending opportunities on Cardano, visit Bonds.org
Social Handles:
Twitter: https://twitter.com/bonds_orgÂ
Discord: https://discord.gg/r3NDwccsbXÂ
Reddit: https://www.reddit.com/user/bonds_orgÂ
Medium: https://medium.com/@admin_34635Â
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How does Crypto Lending Work? Benefits and Risks
Cryptocurrency lending has grown in popularity over the past few years. More and more people are hearing about this exciting new type of investing, and more projects are popping up to help improve their experience. As per the latest trends, this space is expected to rise even further with more and more people coming forward with their lending capabilities. Many people find it hard to understand how crypto lending works and what they can do with this advanced technology. This guide will outline how cryptocurrency lending works, the benefits and risks involved with it, and the kind of project you should be looking at before putting money into one.
What is crypto lending?
Crypto lending is a new type of financing that allows you to earn interest based on the value of your crypto assets. Private lenders take custody of your assets and use them as collateral for loans. They then return at least some portion of your investment every day until the loan is repaid. Crypto lending is a simple concept that enables you to borrow cryptocurrency with a payment plan. You are basically lending your crypto to a lender and getting it back after a set period of time.Â
There are two reasons this type of loan can be advantageous: It allows borrowers to make use of their digital assets elsewhere, like trading or buying more altcoins – without having to sell their own crypto. Secondly, the interest rate is lower than regular loans which means there are no hidden fees associated with this type of financial product. Learn how crypto lending works with this step-by-step guide to crypto lending in easy-to-understand terms.
Types of cryptocurrency
A cryptocurrency is a digital or virtual currency that is protected by cryptography, making counterfeiting or double-spending practically impossible. Many cryptocurrencies are decentralised networks built on blockchain technology, which is a distributed ledger enforced by a network of computers. Using this technology, participants can confirm transactions without needing a central clearing authority. Potential applications include fund transfers, voting, settling trades, and others.
There are thousands of different cryptocurrencies in circulation and the figure keeps increasing. Part of the reason why is because of the way cryptocurrencies can be created. The source code of one can be used to build another. Cryptocurrencies are often not issued by any central body and making them potentially immune to government interference or manipulation. Below are the main types of cryptocurrency.
Bitcoin
Bitcoin is considered the first cryptocurrency created which is designed to act as money and a form of payment outside the control of any one person, group, or entity, thus removing the need for third-party involvement in financial transactions. Bitcoins are rewarded to blockchain miners for their work done to verify transactions and can be purchased on several exchanges.
Bitcoin has become the most well-known cryptocurrency in the world, and its popularity has inspired the development of other cryptocurrencies. Competitors attempt to replace it as a payment system or used it as a utility in other blockchains and emerging financial technologies.
Tether
Tether is a cryptocurrency stablecoin pegged to the US dollar and backed “100% by Tether’s reserves. It’s owned by iFinex, which is a company from Hongkong that owns the crypto exchange BitFinex. Currently, it’s the third-largest cryptocurrency after Bitcoin and Ethereum, and the largest stablecoin with a market capitalisation of almost $83 billion.
Ethereum
Ethereum is a technology for building apps and organisations, holding assets, transacting, and communicating without being controlled by a central authority. You won’t need to hand over all your personal details to use Ethereum. You’ll be able to control your data and what is being shared. Ethereum also has its own cryptocurrency, Ether, which is used to pay for certain activities on the Ethereum network.
Just like Bitcoin, Ethereum lets you use digital money without payment. But Ethereum is programmable, which means that you can also build and deploy decentralised applications on its network. It’s more like a marketplace of financial services, games, social networks, and other apps that respect your privacy.
Terra
Terra is the blockchain technology that houses the LUNA coin and associated stablecoins like TerraUSD. The LUNA coin is used as a protocol token to reduce the volatility of the stablecoins on the Terra blockchain.
The aim of Terra was to create stablecoins to combine the decentralized freedom of cryptocurrencies with the stability of fiat money. However, due to the faults in Terra’s ecosystem, LUNA saw a massive crash in its price.
XRP
XRP is the native cryptocurrency of XRP Ledger, which is an open-source, public blockchain designed to facilitate faster and cheaper payments. If a person uses XRP as a bridging currency, it’s possible to settle cross-border transactions in less than five seconds on the open-source XRP Ledger blockchain at a fraction of the cost of the more traditional methods.
XRP Ledger is a permissionless network of peer-to-peer servers that powers XRP operations. It intends to act as a bridge between hard-to-match currencies. So if there are no market markers on the network willing to trade shekels for shillings, one can sell the shekels for XRP and then use XRP to buy shillings.
How does crypto lending work?
Crypto lending lets users borrow and lend cryptocurrencies with interest. Borrowers can instantly get a loan and start investing just by providing some collateral. When the collateral falls below a certain value, they will need to top it up to the required level to avoid liquidation. When the loaned amount plus a fee is returned, the capital is unlocked. They can also get collateral-free loans known as flash loans, which must be paid back within the same transaction. If the borrower cannot do this, the lending transaction is reversed before it has the chance to be finalised. Crypto loans make borrowing and lending simple, and the process is completely automated by smart contracts.Â
Benefits of cryptocurrency loans
- Capital is easily available. Anyone who can offer collateral or refund the cash in a flash loan or quick cash loan is eligible for a crypto loan. This makes them easier to get than a regular financial institution loan, and they won’t look at your credit score.
- Loans are managed using smart contracts. A smart contract automates the whole loan and borrowing process, making it more efficient and scalable.
- It is simple to get passive money with minimal effort. Borrowers may store their cryptocurrency in a vault and start earning without having to handle the loan themselves.
Risks of crypto lending
- Depending on your collateral, you have a high danger of liquidation. Even with heavily collateralised loans such as car loans, crypto values might decrease unexpectedly, resulting in liquidation.
- Smart contracts are vulnerable to cyber-attacks. Badly constructed code and back-door vulnerabilities might lead to the loss of your loaned amount or collateral.
- Borrowing and lending might put your wealth in danger. While diversifying your portfolio is a smart idea, doing so via crypto-backed loans introduces additional risks.
Things to consider
You’ll have the highest chance of success with a crypto loan if you choose a reputable crypto lending platform and reliable assets as collateral. But, before you lend or borrow, keep the following points in mind:
- Understand the dangers of transferring custody of your crypto holdings. Once the funds leave your wallet, you must rely on someone else (or a smart contract) to handle them. Projects can be the subject of hackers and fraud, and your funds may not be instantly available for withdrawal in such situations.
- Before lending your cryptocurrency, consider the market circumstances. Your coins may remain frozen for an extended length of time, making it unable to respond to crypto market downturns. Lending or borrowing with a new platform can be dangerous as well, and you may be better off waiting until it gains more trust.
- Read the loan terms and conditions carefully. There is a variety of choices for where to obtain loans like secured loans. You should seek lower interest rates as well as more advantageous terms and circumstances.
Conclusion
Cryptocurrency may be a good investment if you’re ready to recognise that it’s a high-risk bet that might pay off – but also that there’s a big possibility you’ll lose it all. Cryptocurrency prices have been decreasing in 2022 as a result of a global crypto price meltdown. Before you purchase and sell digital currency, understand the risks so you can decide whether it is a smart investment for you and your personal finances. It is critical to proceed with caution when investing in bitcoin or other cryptocurrencies.
Author’s Bio:Â
Marjorie Hajim
Marjorie Hajim is the SEO Manager for Friendly Finance. Friendly Finance is a leading loan matching service in Australia specialising in consumer finance. She loves growing businesses with a focus on their online presence and is passionate about organic growth and all things digital.
Disclaimer: This is a press release post. Coinpedia does not endorse or is responsible for any content, accuracy, quality, advertising, products, or other materials on this page. Readers should do their own research before taking any actions related to the company.