6 Reasons to Use a Decentralized Lending Platform
Decentralized lending is one of the fastest-growing sectors in FinTech and for good reason. These networks eliminate banks from the lending equation to create unique opportunities for users. This strategy streamlines the entire lending process in new and exciting ways.
Instead of banks funding your loan, regular users provide funding to large lending pools in P2P lending networks. Borrowers then take out loans with interest from these yield-generating pools. This interest serves two primary roles. It’s used to expand the pool's liquidity and reward lenders for their participation.
There are many reasons why someone would decide to use a decentralized lending service. These unique protocols enable traders to gain market exposure while retaining ownership of their prized digital assets. Here are the top 6 reasons to incorporate a decentralized lending platform into your investment strategy.
Instant Access to Funding
One of the top reasons to go with a decentralized lending platform is responsiveness. There is no waiting when using these platforms. Networks such as MyConstant enable you to get access to funding with less hassle. P2P lending systems utilize a combination of asset management protocols and collateral-based mechanisms to ensure that the network stays profitable and your collateral remains safe.
The open nature of these networks also brings with it some additional advantages. For one, you can say goodbye to the gatekeepers. Every bank has a loan officer that reviews your request. They may ask to meet with you in person to get a better feeling for your personality and traits. In the end, they get the final decision on whether or not you get funded. Sadly, in many instances, their decision is based on their personal beliefs rather than core financial principles.
Decentralized lending platforms remove this inconvenience from the equation. Instead, your loan eligibility is handled autonomously based on your collateral. There is never a credit or background check required to utilize these services. This approach opens the door for more liquidity in the lending pool which benefits the entire network.
Unlock Funding
For many people, decentralized lending services are a vital part of their trading strategy. These networks enable you to unlock funding that you have tied up in other investments currently. These networks enable those who HODL BTC, ETH, or other top projects to free the funding they have trapped in these assets without giving up ownership of the coins.
Recently, another coin type, NFTs (non-fungible tokens) has also shed light on this strategy. NFTs are unique in nature. They represent a single asset or digital creation. As such, their value isn’t determined by market cap, but rather, a mix of personal preferences and scarcity establish the value of these tokens.
For NFT holders, the thought of selling their prized digital art isn't on the table for many. The long-term ROI potential and overall personal connection to these tokens can make them almost like heirlooms. However, these tokens hold a lot of value at this time. Finally, NFT token holders can expand their portfolio and continue to hold their top NFTs securely.
Global Access
Decentralized lending platforms such as MyConstant operate as borderless protocols. Anyone can get a loan or lend out their digital assets. It doesn’t matter what country, region, or political affiliation your state holds. The open nature of these platforms brings additional perks. Primarily, it deepens the liquidity on the exchange and staking pools.
Transparency
Transparency is another reason to make the switch to decentralized lending. You can easily see all the terms of your loan. For example, MyConstant users can borrow any amount for 1, 3, or 6-month intervals. The longer the repayment time, the slightly higher the interest rate you get assigned. You can also see other vital data not normally available to traditional bank borrowers such as total loans issued and more.
Lower Fees
One of the biggest reasons to switch to a P2P lending platform is the low fee structure. Decentralized lending protocols eliminate the middleman and pass the savings on to borrowers in the form of lower interest rates and lenders in the form of rewards payments.
Networks like MyConstant provide competitive APRs on loans and varying repayment options. Additionally, there are no trading fees for borrowers seeking payment in cryptocurrencies. The network automatically scans the market to find you the best rate possible for your crypto.
More Options
Both borrowers and lenders gain access to more options when using a decentralized lending network. These collateral-based systems enable you to utilize an excellent selection of cryptocurrencies. You can spread the collateralization out over your entire portfolio, or you can select a single asset to improve your leverage. Notably, MyConstant offers an LTV ratio of up to 66%.
These systems can also provide more payout options. When you get a loan from your bank, your payment will arrive in USD. For decentralized lenders like MyConstant, you get to decide how you want to receive your funding. The network offers a variety of loan payment options including fiat, stablecoins, or 70+ cryptocurrencies.
MyConstant Provides Decentralized Lending to All
MyConstant is a premier decentralized lending platform that continues to see growing adoption. The network offers more selection and flexibility in terms of loan payouts and terms than the competition. Additionally, the network was built from the ground up to support both fiat and crypto-backed loans against multi-coin collateral. The network provides up to an LTV of 66% on many offers.
Decentralized Lending – A Powerful Tool in Your Investment Arsenal
Now that you have a better understanding of some reasons why you would consider utilizing a decentralized lending protocol, you are ready to create your investment strategy. There are endless reasons to seek out a loan and P2P lending services provide you with instant access to funding. For these reasons, platforms like MyConstant serve a vital role in the expansion of this sector.