Crypto Loans as an Asset Preservation Tool: The Complete Guide

For long-term investors, crypto loans represent a particularly useful financial instrument. This form of lending, secured by crypto assets, allows you to obtain necessary liquidity without having to sell your assets. Crypto loans solve the classic investor dilemma: you need funds, but you believe in the growth potential of your assets and do not want to sell them.

Why Crypto Loans Attract Investors

Modern investors appreciate crypto loans for several key advantages. First, maintaining the portfolio remains a priority — by taking out a loan, you do not lose the growth potential of your assets. This is especially important during positive market conditions.

Second, flexibility in collateral management provides significant benefits. You can use multiple different assets as collateral and add them at any time, greatly reducing the risk of forced liquidation of your position.

The third aspect relates to capital optimization. Thanks to the cross-margin mode, the borrower can manage multiple positions based on a single collateral pool. This simplifies risk control and allows for more efficient portfolio management.

The fourth advantage is complete freedom in using the borrowed funds. You can use the money for various purposes or convert it into fiat currencies through appropriate channels.

Finally, the repayment process has no strict restrictions. You can make payments at your convenience, adjusting the repayment schedule to your situation.

Flexible and Fixed Rates: Choosing the Right Crypto Loan

The market offers two fundamentally different approaches to structuring crypto loans. Each has its own characteristics and is suitable for different use cases.

Variable Interest Rate Model

In this option, the interest rate remains dynamic — it updates and accrues hourly depending on market conditions. The positive aspect is the absence of time limits on the borrowing period. However, the borrower cannot predict the exact amount of interest, as it depends on current demand and supply for borrowed funds.

Fixed Interest Rate Model

An alternative approach involves setting the interest rate at the time of opening the loan order. The rate is fixed between the borrower and the lender and remains unchanged throughout the entire period. Standard durations are available: 7, 14, 30, 60, 90, or 180 days. Predictability of payments simplifies financial planning.

An important detail: with a fixed rate, a 24-hour grace period is provided, during which the interest rate is applied at triple the normal rate. After this period, there are three options: automatic renewal, conversion to a flexible rate scheme, or manual repayment. It is important to note that in the case of early closure, paid interest is non-refundable.

Key Risk Parameters in Crypto Loans

Understanding the LTV (Loan-to-Value) ratio is critically important for risk management. The system uses a multi-level structure for this indicator:

• Initial LTV is 80% — the maximum ratio of loan amount to collateral value at the time of opening the position
• Margin call is triggered at LTV 85% — the system issues a warning about the need to add collateral
• Delayed liquidation begins at LTV 93% — the system starts the forced closure process but provides some time for action
• Full liquidation occurs at LTV 95% — the position is automatically closed

All these indicators are calculated in cross-margin mode by dividing the total volume of all active loan orders by the total collateral value. Loans with both rate schemes are combined into a single calculation.

Collateral Management and Limits

The crypto loan system does not impose strict limits on collateral size — you can add assets in the amount you need. Collateral is distributed among all active loan orders, providing flexibility to manage multiple positions simultaneously.

Additional convenience is provided by support for sub-accounts. A single borrowing limit applies to the main account and its linked sub-accounts, simplifying asset management at the user level.

Choosing the Optimal Crypto Loan Option

Deciding between a flexible and a fixed rate depends on your investment strategy. If you expect to reach your goals soon and are uncertain about the timing, the variable rate model offers maximum flexibility. If you plan a medium-term period and desire predictability of expenses, a fixed rate provides greater certainty for planning.

In both cases, a crypto loan remains an effective way to maintain liquidity without compromising your asset portfolio.