These are the cryptocurrencies you can borrow on Binance

Binance, the exchange largest cryptocurrency exchange in the world, today, October 16, 2024, added EigenLayer (EIGEN) to its very extensive list of crypto assets included in its Loans section (Loansin English).

The loans or loans from Binance They are a service that enables the request for loans cryptocurrencies leaving other cryptocurrencies as a guarantee. This cryptocurrency that users offer as collateral is known as a collateral asset.

In addition to this new token added in the Binance listingusers can request the loan of more than 180 cryptoassets. Among them, Bitcoin (BTC), cryptocurrencies such as Ethereum (ETH), Solana (SOL), XRP (XRP), Toincoin (TON), Tron (TRX), Dogecoin (DOGE) or even stablecoinssuch as USDT or USDC.

This exchange It also offers the possibility of borrowing memecoinssuch as Dogwifhat (WIF) or Bonk (BONK) and tokens related to Telegram’s Web3 games, such as Dogs (DOGS) and Catizen (CATI).

The image above also allows you to know the annual interest rates required by Binance for each crypto asset. In the case of BTC, the annual rate is 1.25%, in ETH 2.71%, in SOL 5.82% and in the stablecoins USDT and USDC 17.8% and 19.33%, respectively.

On the other hand, the expression “flexible rate” refers to the fact that this rate can vary. For example, if a loan has a flexible rate of 5% per year, but market conditions change and demand for loans increases, Binance could adjust the rate at 7% annually. This means that the interest that users must pay for the loan acquired will increase.

Flexible loans on Binance They do not have a fixed expiration date. Users can hold the loan for as long as they wish, as long as they meet the necessary requirements, such as maintaining enough collateral to avoid liquidation and pay accrued interest.

Binance offers the possibility of executing this operation at a fixed rate for 7 or 30 days.

Regarding the minimum loan amounts, if a user wanted to request it in BTC or ETH, they could do so from 0.0000147 BTC and, in the case of ETH, 0.00038004 ETH, which which is equivalent to 1 dollar in both cases. In the following link you can see the complete list of cryptocurrencies to borrow within Binance.

How do collaterals work on Binance loans?

In principle, this collateral must be of a value greater than the amount of the loan requested.

By requiring higher collateral, Binance ensures that if the user is unable to repay the loan, the platform can liquidate the collateral and recover the money borrowed. This measure by Binance acts as a kind of insurance.

This product It could be useful for users to obtain liquidity and use the funds lent by Binance for other investments, market operations, or even for personal consumption.

Whatever the excuse for requesting a cryptocurrency loan, the advantage of this product is that it can be made without having to sell the assets placed as collateral, in case it was believed that the price of those assets could rise.

At the end of the term, the user must return the loan plus the corresponding interest. If a user could not return the loan within the established period, Binance will be able to sell that collateral to recover the money he lent.

In addition, it is also important to know that the collateral asset is blocked while used as collateral. This means that users cannot manage, sell, or withdraw that cryptocurrency while the loan is active. Binance holds it as security to ensure that if you don’t repay the loan, it can liquidate that collateral and cover the debt.

The list of assets that can be used as collateral is the same as the one that users can borrow: bitcoin (BTC), ether (ETH), solana (SOL), USDT, USDC, etc.

However, these tools must be handled with caution due to their inherent risks.

What are the risks of borrowing cryptocurrencies?

For example, the volatility of the price of the borrowed asset or collateral poses a risk. If the asset that users receive falls in its price, this requested amount may not be sufficient for what was purchased.

If cryptocurrency market fluctuations affect the collateral and its value falls below the minimum threshold required by the platform, there is a risk that the collateral may be automatically liquidated to cover the loan. This implies the loss of collateral.

On the other hand, whenever holdings are delegated to a third party (such as a exchange), there is a risk that face financial problems or even bankruptcy.

Therefore, when using a platform to request loans, investors trust in its security and solvency. Some risks related to this include situations such as possible attacks of hackers or security problems on the platform that may affect your funds.

An additional risk cannot be ruled out: that the platform makes changes to the terms of service, policies or regulations that affect the loan.