Things to consider before using a crypto lending platform

Things to consider before using a crypto lending platform

Crypto lending platform offers crypto loans to people. The demand for crypto loans has increased for different reasons. People may borrow or lend crypto to achieve some purposes. 

 For instance, a crypto loan can be collected to enter into a trade, buy a coin and do much more. There are different types of crypto loans like Collateralized loans, flash loans, centralized loans, and decentralized loans. 

Another set of participants involved in crypto loans is the lenders. These people have idle tokens lying in their wallets and decide to give them to a crypto lending platform to earn returns. 

You must consider the following things before getting a crypto loan:

  • Risks attached to the crypto lending platform

When a lender decides to give their coins to a crypto lending platform to earn returns, it has risks. The lender has to trust that the smart contract or the centralized authority in charge of their coins will handle them safely. There have been cases of hacked smart contracts and hackers draining the funds. 

  • Terms and conditions 

Before using any crypto lending platform, either as a lender or a borrower, reading the fine print of the terms and conditions is crucial.  Are the terms and conditions favorable to you? As a lender, does the platform have a clause that ensures they return your funds if an attack occurs? Do they have an insurance policy? 

  • Market conditions

When you lend your crypto, it is locked for a period. It is essential to check the market conditions during that period. Is it wise to lock one's tokens and earn returns from lending, or are there better ways to earn returns?

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