What is loan collateralization in crypto?

Loan collateralization occurs when crypto borrowers use their crypto tokens to secure a loan. This happens when a crypto investor deposits tokens from their wallet into a loan smart contract. In return the loan smart contract creates or “mints” a stablecoin typically. This stablecoin is the loan. The token that was deposited is the collateral.

Loan collateralization in crypto

Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.

%d bloggers like this: