- What is Crypto Loan?
Crypto Loans is a feature that offers users the option to simply create crypto-collateralized loans and receive Euros in exchange for fixed interest.
- How does it work?
In loan creation users may choose the principal amount in Fiat money (Euros) and the collateral amount in cryptocurrency (BTC or ETH). Users may also configure the collateral amount, where the default minimum is set to 200% of the loan amount and the maximum collateral is limited by the amount of cryptocurrency (BTC or ETH) owned by the user on the platform or by the loan limits enforced by the ICONOMI platform.
In order to create a loan, users must transfer at least 200% minimum collateral in cryptocurrency (BTC or ETH) to the ICONOMI platform (if one doesn’t have the funds on it yet). This collateral remains locked in ICONOMI custody until either the loan is paid off or the loan is liquidated. Upon Loan pay off or liquidation, the remaining collateral (BTC or ETH) is unlocked and returned/deposited to the user’s account. The locked collateral is also a source of interest charges as defined in the Interest article.
Note: Please consider finding additional information on Crypto Loans also here.