Clients can also take advantage of a discounted rate of 0% per day when they borrow BUSD using CAKE as collateral. Additionally, they can enjoy an impressive discounted rate of 0.04% per day when they borrow BUSD, 0.06% when they borrow USDT on the the Binance Loans platforms.

WHY SHOULD ONE BORROW ON BINANCE LOAN?‌

1. Binance Loan has launched a low interest rate promotion for clients looking to borrow BUSD and USDT. BUSD borrowers can get a low interest rate of around 0.004% per day when the user decides to use MDX as collateral.

2. Very high interest rates: When taking an unsecured cryptocurrency loan ( i.e without collateral), the lender is likely to inject a very high hourly interest rate and at the end of the loan term, the borrower will pay 2 to 4 times the usual rate.

WHAT ARE THE RISKS OF CRYPTO LOANS WITHOUT COLLATERAL?

1. Fraud: As we know, the lender uses collateral as security for fear that you won’t pay back and if the lender gives you a loan and knows fully well that you can’t pay it back then the lender has an ulterior motive.

As the higher the collateral value the lower the lender risk. This should be calculated only by calculating the amount of money and interest rate determined by value of collateral, terms of the loan (reimbursement period, interest rate, etc.).

2. Collateral is used to calculate the lending risk: It is very important that the value of the collateral is considered guarantee before the lender can lend.

If the borrower is unable to pay, the lender can exercise the right to seize or liquidate the collateral.

WHY DO CRYPTO LOANS REQUIRE COLLATERAL?

‌1. Collateral guarantees security deposit: since credit checks are not used in crypto loans, a precautionary guarantee is required as a security to reduce the risk for lender. 

Cryptocurrency lending involves three parties to provide security: Lenders, borrowers, and lending platforms like Binance to provide security.

Another difference is that traditional interest on loans is calculated on a monthly basis, whereas interest on crypto loans is calculated on an hourly basis, and platforms like Binance allow loans from 7 days to 180 days.

of risk a borrower can invest in, whereas crypto uses individual collateral (guarantee) to calculate loan risk. This method is called LTV. (Loan value to collateral value).

in a pool to manage your assets and earn interest on them. The basics of cryptocurrency loans are in some ways largely similar to traditional loans. What sets them apart, however, is that traditional lenders, banks, or other institutions use credit scores to calculate the amount

Simply put, Cryptocurrency loan is the lending of cryptocurrency from one user/investor (in this case is Binance) and giving it to another user/investor for free. You do not need to be a borrower for cryptocurrency alone, you can also earn passive income by simply holding assets.