Getting Started with Crypto Borrowing: A Complete Guide to Securing Loans with Your Digital Assets

When you borrow crypto through collateralized lending services, you unlock liquidity without needing to sell your holdings. This approach is particularly valuable if you’re confident your assets will appreciate long-term and prefer to maintain your positions while accessing funds. Crypto borrowing services offer both flexible and fixed-rate options, allowing you to choose terms that align with your financial strategy.

Understanding the Basics of Crypto-Backed Loans

Crypto borrowing operates on a straightforward principle: you deposit digital assets as collateral and receive borrowed funds in return. These services are “overcollateralized,” meaning the value of your deposited assets exceeds the loan amount, protecting both you and the lending platform from excessive risk.

Key features of modern crypto lending platforms include:

• Flexible-rate loans – Interest rates fluctuate based on market supply and demand, offering potential savings if rates decline
• Fixed-rate loans – Lock in a predetermined interest rate for the entire loan term, providing predictable costs
• Competitive pricing – Interest rates are typically competitive, with recommendations displayed to help you identify the best available rates
• VIP enhanced limits – Premium account holders often enjoy increased borrowing capacity beyond standard thresholds

The Loan-to-Value (LTV) ratio is central to crypto borrowing. Your total borrowed amount plus accrued interest cannot exceed 80% of your collateral’s value. This initial LTV threshold protects against market volatility and liquidation risk.

Initiating Your First Borrowing Position

To begin borrowing, follow this streamlined process:

Step 1: Access the lending interface Log into your account and navigate to the lending or finance section. Look for the crypto lending marketplace where you can browse available borrowing options.

Step 2: Select your loan parameters Browse all available loan products and select the asset you wish to borrow. You’ll see options for different loan durations and their corresponding interest rates. Choose the option that matches your needs.

Setting Up a Flexible-Rate Loan

When you opt for flexible-rate terms, a borrowing form will appear requesting:

1. Current market recommendation – The top of the form displays the best interest rate currently available in the market
2. Loan amount – Enter your desired borrowing amount, or click “Maximum” to borrow the highest amount allowed based on your collateral value
3. Collateral specifications – Select which of your assets will serve as collateral and confirm the amount
4. Account enhancement – If you’re a VIP member, you can expand your borrowing limit beyond standard restrictions
5. Risk metrics – The system automatically calculates your resulting LTV, hourly/annual interest rates, and estimated daily interest costs

Setting Up a Fixed-Rate Loan

Fixed-rate borrowing provides greater certainty with these configurable elements:

1. Rate selection – Review market recommendations for fixed-rate options and durations, then specify your preferred interest rate
2. Loan amount – Input the exact amount you wish to borrow
3. Collateral choice – Select from your available assets to secure the loan
4. Enhanced limits – VIP members can increase their borrowing allowance through account benefits
5. Repayment automation options:
   • Auto-repay feature – Enable automatic repayment using your account funds on the settlement date, eliminating overdue risk
   • Rate conversion – Choose to automatically convert your fixed-rate loan to flexible-rate status upon maturity
6. Confirmation – Review all details and confirm your borrowing request

Important considerations for borrowers:

• Interest is charged upfront and deducted from your loan proceeds
• Early repayment is permitted, though prepaid interest is non-refundable for fixed-rate loans
• If a borrow order matches with multiple supply orders at different times, you’ll have corresponding settlement dates for each match
• The LTV calculation uses Cross Margin methodology, meaning collateral covers all active loan orders collectively

Managing Your Active Loans

Once you’ve successfully secured a loan, monitoring your positions is essential for risk management.

Dashboard overview: After borrowing, visit your loans dashboard to see a comprehensive summary featuring:

• Total Debt section – Displays all borrowed assets, broken down between flexible and fixed-rate loans with current valuations
• Funding status – Shows loans currently in the matching process, active but not yet fully confirmed
• Active borrowing – Lists all executed loan orders with their current status
• Collateral holdings – Complete inventory of all pledged assets with quantities and USD valuations

Detailed order tracking: Access your complete loan history to review all borrowing orders, fixed and flexible loans separately, transaction details, interest accrual, and collateral specifics. Filter by asset type or date range to focus on particular loans.

Repaying Your Borrowed Assets

Returning borrowed funds is flexible and straightforward, with multiple repayment options available.

Step 1: Locate the loan for repayment From your dashboard, find the specific loan you want to repay and select the repayment option. Alternatively, access your orders history and initiate repayment directly from there.

Step 2: Choose your repayment configuration If you hold multiple loan types, you can repay all outstanding liabilities at once by selecting “All,” or focus on specific loan categories. Note that the system prioritizes repaying flexible-rate loans before fixed-rate loans. You may also designate multiple collateral types for repayment.

Flexible repayment features:

• Partial repayments allowed – Pay down portions of your loan at any time
• Interest calculation – Based on actual borrowing duration; periods under one hour round up to a full hour
• Anytime redemption – No penalties for early repayment

Fixed-rate loan repayment considerations:

• Upfront interest – All interest is charged when the loan initiates and isn’t refunded even if you repay early
• Auto-repay advantage – If enabled, your account automatically covers repayment on the settlement date, preventing overdue penalties
• Account requirements – Ensure sufficient funds exist to cover full automatic repayment, or the process will fail

Additional repayment notes:

• Repayment amounts first cover accrued interest, then reduce the principal borrowed amount
• Large repayments involving asset conversion are subject to a per-transaction limit (currently approximately 300,000 USD equivalent) to manage market impact
• Some repayment methods may incur conversion fees; the applicable rate is the higher of the collateral asset’s or debt asset’s repayment fee rate
• You can set customizable reminders for upcoming repayment due dates directly from your dashboard

Extending and Renewing Loans

The loan renewal feature allows you to extend terms without restarting the borrowing process entirely.

Renewal eligibility:

• The loan must be partially or fully repaid
• At least 6 hours must remain before the original due date
• Each loan contract can be renewed up to 5 times maximum

How to renew:

Step 1: Initiate renewal From your dashboard, locate the loan you want to extend and select “Renew.” You can also find renewal options through your order history.

Step 2: Confirm renewal terms Specify the collateral amount for the renewed borrowing period. Review the updated LTV and new repayment due date. Click “Renew” to complete the process. Note that the original loan amount remains fixed and cannot be modified during renewal.

Tracking renewals: View all your renewal records through your dashboard under the renewal history section. Click on individual renewals to see detailed breakdowns showing each extension under the same loan contract.

Controlling Your Collateral Position

Your collateral amount directly influences your LTV and liquidation risk. Adjusting collateral is a critical risk management tool.

Adding collateral (increasing your safety margin):

Access your dashboard, navigate to the collateral section, and select “Add Collateral” or “Increase Collateral.” Input the amount you wish to deposit, or click “Maximum” to add your entire available balance from your account. Additional collateral reduces your LTV and significantly lowers your liquidation risk.

Removing collateral (extracting unused assets):

Select the “Reduce Collateral” option and enter the amount you wish to withdraw. Note an important restriction: you can only reduce collateral when your current LTV falls below the initial 80% threshold. The “Maximum Reduction Qty” represents the highest amount you can safely remove while maintaining the initial LTV level—always check this figure before withdrawing.

Step-by-step collateral adjustment:

1. Go to your dashboard overview
2. Locate the collateral section and click “Adjust”
3. Choose whether to increase or reduce your collateral position
4. Enter your desired adjustment amount
5. Review all details carefully
6. Click “Confirm” to finalize the change

By strategically managing your collateral, you maintain better control over your borrowing capacity and reduce the risk of forced liquidation during market downturns.

Key Takeaways for Crypto Borrowing Success

• Understand your LTV – Monitor how your debt and collateral ratio affects your borrowing position
• Choose the right rate type – Flexible rates offer potential savings; fixed rates provide predictability
• Leverage automation – Enable auto-repay to eliminate missed payment risks
• Monitor your position – Regularly check your dashboard to ensure your LTV remains safe
• Manage collateral proactively – Adjust collateral when needed to maintain a comfortable safety buffer
• Plan for early exit – Remember that fixed-rate interest isn’t refunded if you repay early
• Beware liquidation thresholds – Maintain sufficient collateral to avoid forced asset sales

For additional resources on crypto-backed lending, consult guides on loan fundamentals, frequently asked questions about borrowing mechanics, and detailed information on LTV ratios and liquidation processes.