How to HODL and Trade Using P2P Lending Platforms

Eventually, every crypto investor comes to a point in their trading strategy where they are faced with a difficult decision such as whether to HODL or trade into new opportunities. Bitcoiners have long had this predicament, but recently, these problems have become an issue for NFT (non-fungible token) holders as well.

The question remains, how do you retain ownership of your valuable digital assets while still keeping enough capital to participate in new opportunities? In the past, you would have to sell your coins to get capital to participate in new projects. This scenario left a lot of investors in worse conditions as their new projects may not have appreciated as fast as Bitcoin. Luckily, there are ways to get around this hurdle today.

P2P Lending

Peer-to-Peer lending platforms are one of the solutions to this problem. These networks enable you to instantly access funds. You only need to meet the network’s collateral requirements. There are no credit or background checks required. Also, there is no gatekeeper judging your demeanor or personal traits. 

P2P Lending Advantages

P2P lending platforms provide the market with a secure way to gain added exposure without relinquishing ownership of your prized blockchain assets. For example, let’s say you have .5 BTC in your stash. You are planning on holding these BTC for years. As such, trading isn’t an option. 

Instead, you use your BTC as collateral to get a loan to reinvest in other exciting projects in the market. Unlike your traditional bank lending procedure, you don’t need to fill out a bunch of forms and await an answer. You simply lock your collateral in a smart contract and select the repayment and interest terms that meet your needs. 

From there, your funding is immediately dispersed to your crypto wallet. You are now free to use your new funding as you see fit like investing in the growing DeFi market or some NFT collectibles. You can even use the funding to buy more BTC and improve your market positioning. 

Scenario 2 – Become the Lender

Now let’s take the same P2P scenario but instead of looking for a loan, you want to simply lend out your coins. P2P lending platforms enable you to do this and secure rewards in the form of interest payments. Notably, many networks allow lenders to set the loan requirements for their assets as well.

To become a lender, you need to stake your coins into a network lending pool. The cool thing about this protocol is that it enables borrowers to select their own criteria and ensures that lenders receive repayment. This task is made possible due to the interest-generating features of the pool combined with automated asset liquidation measures. Together these systems ensure that lenders receive repayment on time regardless of a borrower’s actions. 

Finding a Reliable P2P Lending Platform

There is a wide selection of P2P lending platforms available at this time. This sector continues to be one of the fastest-growing in the industry. However, every network has its own features, services, fees, and limitations. Here are some key features to look for when determining what platform to choose. 

The first thing you want to evaluate is the network’s reputation. Platforms such as MyConstant have been in operation for years providing reliable p2p loan services to the market. By sticking to reputable firms, you can save on potential losses due to rug pulls and other scams.

Start-Up Cost

Another vital point to review is the startup costs. Some networks require you to lend or borrow high values. MyConstant offers a low $10 buy-in which makes it ideal for new users getting acquainted with the benefits of decentralized lending protocols.

LTV Ratio

Another important concern to review is the platform’s loan-to-value (LTV) ratio, This percentage decides how much collateral you need to obtain a certain loan. The higher the value, the more funds you will have access to. For example, MyConstant offers s LTV ratio of up to 66%. 

Loan Payment Currencies

The next item to review is the loans payment options. Most platforms offer payment in stablecoins or a network’s utility token. Its recommended using networks that provide you with multiple currency options. For example, MyConstant supports 71+ cryptocurrencies and direct USD bank deposits. 

Technical Requirements

It doesn’t matter how good a p2p network is if it’s difficult to navigate and find the features and services you require. The best networks enable new users to borrow against their portfolio in minutes rather than hours. This accessibility is crucial in promoting further decentralized lending adoption. 

Repayment Options

It’s important that you stick to flexible platforms that allow borrows to choose their repayment schedule. You can select between 1, 3, 6, and 12 months on most networks. The longer the repayment schedule and the higher the interest rates on the loan. 

Collateral Security

You also must consider the security procedures of the network. You need to ensure that your lender ensures that your collateral is securely stored to ensure your repayment upon the completion of the lending terms. 

HODL and Earn 

Now that you have a little more insight into how to use a decentralized lending platform to gain market exposure, you are ready to improve your trading strategy. The main thing to remember is to always DYOR (do your own research) to ensure the platform you invest in is legit. If you follow that rule and the tips in this guide, you are sure to see some healthy ROI opportunities.

The post How to HODL and Trade Using P2P Lending Platforms appeared first on .