Crypto Lending Explained: What Are Crypto Loans, How They Work, and Risks to Consider

Crypto lending allows users to leverage their cryptocurrency in loan or interest-bearing products instead of simply holding assets. This guide explains the fundamentals of crypto loans, including why people use them, the mechanics of collateralized and uncollateralized loans, flash loans, and key terms like LTV and liquidation threshold. It contrasts centralized crypto lending with DeFi lending, covering custody, accessibility, oversight, transparency, and user responsibility. The article also explores crypto lines of credit, the regulatory landscape in the US, potential risks such as lack of bank-level protections and market volatility, and factors to consider when choosing a platform. Designed for educational purposes, it provides a thorough overview without offering financial advice.