Crypto Loan
A loan that uses cryptocurrency as collateral or provides borrowed crypto or cash through a crypto lending platform.
A crypto loan is a borrowing arrangement where cryptocurrency is used as collateral, or where the borrowed asset itself is crypto. In many centralized finance services, a user deposits assets such as bitcoin or ether with a platform, and the platform lends them cash, stablecoins, or another crypto asset. The borrower pays interest and must maintain enough collateral value to support the loan. If the collateral falls too far in value, the platform may require more collateral or liquidate some of it to repay the debt.
Crypto loans matter because they let holders access liquidity without immediately selling their assets, and they can also support trading, hedging, or short-term cash needs. For example, someone who owns bitcoin might borrow stablecoins against it instead of selling the bitcoin, similar to how a homeowner might borrow against home equity. The key difference is that crypto prices can move quickly, making margin calls, liquidation risk, platform risk, fees, and repayment terms especially important to understand.
Other terms in CeFi
CeFi
Centralized finance is crypto services run by companies that custody assets, manage accounts, and provide trading, lending, or yield products.
Centralized Exchange
A platform run by a company that lets users buy, sell, and trade cryptocurrencies through managed accounts and order books.
Custodian (Crypto)
A crypto custodian is a service that holds and safeguards digital assets or private keys on behalf of users or institutions.
Margin Trading
Borrowing funds on an exchange to open a larger crypto position than your own balance would allow, increasing both potential gains and losses.