Crypto Loans in Six Steps
Web3.loans explains crypto-backed and DeFi lending in plain language, so you can judge any offer before you pledge a thing.
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You lock up digital assets as collateral and borrow against them, usually in cash or a stablecoin. You keep ownership of the collateral and get it back when the loan is repaid.
Crypto-backed loan
LTV is the loan amount divided by the value of your collateral. Borrow $500 against $1,000 of crypto and your LTV is 50%. Lower LTV means more room before trouble.
Loan-to-value (LTV)
If your collateral falls in value and your LTV climbs past the lender's limit, the lender can sell some or all of it to cover the loan. Fast markets can trigger this in hours.
Liquidation
A centralized lender holds your collateral for you. An onchain lending protocol holds it in a smart contract. Each carries risk: the company can fail, and code can have bugs.
Custodial vs onchain
Look at the annual rate, any origination or withdrawal fees, and whether interest changes with the market. A low headline rate can hide a variable rate that rises later.
APR
Ask who holds the collateral, what triggers liquidation, how you add collateral in time, and what happens if the lender stops operating. Never pledge what you cannot afford to lose.
Due diligence
Educational only, not financial advice. Crypto prices move fast and you can lose what you put in. Some links are affiliate links; we may earn a commission at no cost to you.