A Step-by-Step Guide on How to Secure a Crypto Loan From YouHodler
The main objective of decentralized finance (DeFi) projects is to allow access to financial services to people who cannot get them from traditional banks. There are several protocols offering such services via blockchain, and one of them is YouHodler. In this article, you will learn how to secure and repay crypto loans using YouHodler. Keep reading to find out more.
What’s a Crypto Loan
Crypto loans are just like loans from traditional financial institutions. The major difference is that the borrowers use their crypto assets as collateral rather than their physical assets, such as houses.
You can obtain a crypto loan in various types of digital assets, but many lenders mostly offer loans in Ethereum, Bitcoin, and stablecoins.
How Do You Secure a Crypto Loan From YouHodler?
As mentioned earlier, there are many crypto lenders in the market. For this article, we decided to pick YouHodler because it is beginner-friendly. Here is how you can get a loan from the platform:
Step 1: Set Up an Account With YouHodler
YouHodler is a DeFi protocol that allows crypto hodlers to access loans quickly and easily. Your crypto value determines how much you can borrow. But before securing a loan, you will need to sign up with the platform (youhodler.com). This is done by providing a valid email address and a unique password.
After signing up, you can enjoy several benefits, including collateralizing loans with over 40 different crypto assets and receiving loans in various fiat currencies such as USD, Euro, and British pounds with a repayment period of up to a year.
Step 2: Send Crypto to Your YouHodler Wallet
As mentioned above, YouHodler accepts 40 cryptocurrencies as collateral. And to get a loan, you must transfer some of those assets to your newly created wallet on YouHodler. Note that the protocol does not charge deposit fees.
Step 3: Submit a Crypto Loan Application
After depositing the cryptocurrencies to be used as collateral, it is time to apply for a loan. You can do this by going to the main menu and then clicking the “Loans” button. After that, click the “Create a New Loan” button. Based on the deposited collateral, YouHodler will determine the maximum amount of loan you can borrow. For this article, we deposited 9,000 GALA as collateral, and the protocol allowed us to borrow 215 USDT. The loan attracted a 0.027% daily fee, which is about 0.061 USDT.
One fantastic feature of YouHodler is “Take Profit,” which the borrowers can use if they wish to let the protocol sell their collateral in case the crypto hits a particular price.
Step 4: Withdraw Your Crypto Loan
After YouHodler processes your loan, it will instantly reflect in your account. The next step involves withdrawing it. The platform supports two withdrawal options: Bank wire transfers via SWIFT and SEPA and crypto transfers.
Step 5: Pay the Daily Loan Interest
Immediately after you receive the loan, YouHodler starts charging the daily loan fee, which is deducted from your wallet. And if you do not have enough money in your account to pay the fee, the platform includes it in your repayment amount.
Step 6: Repay the Crypto Loan and Claim Your Assets Back
If you are ready to repay your loan, click the “Repay Loan” button under the “Loan” section. YouHodler allows borrowers to make repayments via bank wire, crypto transfers, and AdvCash. Once the loan is fully paid, your collateral will be deposited in your account, which you can withdraw at any time.
Can You Borrow Crypto Loan Without Collateral?
Flash loans are the only uncollateralized loans offered in the DeFi space. They are repaid within minutes using a single transaction. Most borrowers of such loans use them to carry out arbitrage trading.
That said, if you wish to obtain a crypto loan with a longer repayment period, you must provide collateral, which is essential in helping a crypto lender like YouHodler minimize lending risks.
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