In the dynamic world of cryptocurrency, navigating market transitions requires strategic financial tools. CoinEx Loans emerges as a robust solution, offering crypto enthusiasts the flexibility to leverage their assets without liquidation.
Understanding CoinEx Loans
CoinEx Loans enables users to borrow various cryptocurrencies by pledging assets like BTC, ETH, and USDT as collateral. Notably, these assets benefit from a 100% discount rate, meaning their full market value is considered when determining loan amounts.
Competitive Edge Over Decentralized Lending Platforms
In decentralized finance (DeFi), platforms often impose collateral factors (or Loan-to-Value ratios) below 100%, requiring borrowers to over-collateralize their loans. For instance, a DeFi platform with an 80% collateral factor allows borrowing up to 80% of the collateral's value. Moreover, minimum collateralization rates on major DeFi lending platforms typically range between 120% and 150%, necessitating higher collateral than the loan amount.
In contrast, CoinEx's 100% discount rate for BTC, ETH, and USDT allows users to maximize their borrowing potential without the need for over-collateralization, offering a more efficient and user-friendly borrowing experience.
Case Study 1: Maximizing Loan Potential with BTC Collateral
Scenario: Alice holds 1 BTC, valued at $90,000, and seeks a loan using her BTC as collateral.
CoinEx Loans:
- Collateral Value: $90,000
- Discount Rate: 100%
- Effective Collateral Value: $90,000
- Initial Loan-to-Value (LTV) Ratio: 80%
- Maximum Loan Amount: $90,000 * 80% = $72,000
DeFi Platform with 80% Collateral Factor:
- Collateral Value: $90,000
- Collateral Factor: 80%
- Maximum Loan Amount: $90,000 * 80% = $72,000
- Required Collateralization: 125%
- Required Collateral for $72,000 Loan: $72,000 * 125% = $90,000
In this scenario, DeFi requires over-collateralization, meaning Alice must provide collateral worth more than the loan amount. CoinEx Loans, with its 100% discount rate, allows Alice to borrow up to 80% of her collateral's value without the need for over-collateralization.
Advantages of CoinEx Loans
1. Introducing "Tiered Collateral Discount" mechanism
CoinEx establishes discounts based on collateral risk profiles to calculate effective collateral value, ensuring market stability and protection against excessive market volatility. This is particularly effective for tokens with moderate market depth, preventing dramatic price fluctuations and providing additional asset security.
2. Introducing "Loan Asset Recovery" mechanism
When the lending pool reaches its risk threshold, the system pauses new loans and waits for natural maturity returns. This gentle approach allows the pool to recover to safe levels while avoiding sudden forced liquidations, better protecting your collateral assets.
3. Instant arrival and auto-renewal
Borrowed funds are credited immediately after loan initiation, with no waiting period. Auto-renewal is enabled by default at the start of a loan. Every 10 days when the loan term ends, if the platform's liquidity pool supports renewal, the system automatically processes it, preventing unintended liquidations due to oversight or missed deadlines.
4. Secure and stable
During technical upgrades of collateral assets (such as rebranding or cross-chain migrations), lending services continue to operate normally, and existing pledged assets remain valid. Additionally, CoinEx injects a portion of daily lending interest income and liquidation fees into an insurance fund to cover potential losses incurred.
5. Diverse Collateral
Multiple cryptos are supported as loan collateral. When borrowing a particular crypto, you can use more than one crypto as collateral at the same time, simple and convenient.
Conclusion
CoinEx Loans offers a compelling advantage during market transitions by allowing users to leverage their BTC, ETH, and USDT holdings efficiently. The 100% discount rate and favorable loan terms position CoinEx as a strategic choice for those seeking liquidity without the complexities of over-collateralization prevalent in many DeFi platforms.
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