Crypto Lenders Raised The Interest Rates Of Crypto-backed Loans

Genesis Capital CEO Michael Foro asked for an additional $ 100 million in collateral from a specified pool of approximately 40 clients. Another company, Celsius Network, which has loaned to nearly 225 institutions, which equates to a loan of about $ 600 million, has experienced margin calls of about $ 100 million, said CEO Alex Mashinsky.

The rival company Nexo explained that some of its users had repaid loans, while at the same time liquidating the collateral of other customers. Furthermore, BlockFi's latest blog post made margin calls on the dollar-denominated loans, along with some liquidations.

After the hustle and bustle of crypto lenders, Genesis currently has no plans to provide loans with less than 100 percent collateral until the crypto market gains pace. Moro explained that as bitcoin's price fell, demand for loans shifted from fiat to bitcoin as traders look for the benefits of arbitrage from the difference between bitcoin's spot market and futures prices.

The Digital Currency Group unit has increased the loan collateral requirement from 105 percent to 120 percent for loans backed by bitcoins.

Mashinsky, CEO of Celsius raised the standards for collateral, but had the best day for the company as it borrowed more with the unprecedented high interest rates. He clarified that over-the-air loans have risen to an eye-catching 260 percent interest rate compared to the usual 15 to 20 percent rate. He hinted to tighten the credit line limits on loans the company offers.

Nexo, which is currently offering crypto-collateralized fiat loans and interest on fiat and stable coins, has halted the product's launch, which will help users gain interest in their crypto assets. CEO Trenchev explained that they are not changing loan interest rates as demand for fiat loans will stabilize as bitcoin appears to have fallen around $ 3,867. He added that digital assets are one of the best securities to have loans because of their immediate liquidity.

Since last year, the crypto lending sector became known as some holders earned returns on assets, others tried to raise money without losing their coins in the market, while market makers borrowed to complete orders quickly. Recently, some crypto lenders have experienced the clear day, while others have experienced a crash.

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About the author
Tarulika Jain

Tarulika JainGraduated as an engineer, focusing on the latest cryptocurrency trends. As an economic enthusiast, she likes to read about the changing economies of the world.

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