Binance announced that it is adding ADA and AVAX as collateral assets on its Binance Loans platform, in an effort to expand its lending offerings.
Binance adds ADA and AVAX as collateral assets
In a blog post published on May 25, popular crypto exchange Binance announced that it is adding the cryptocurrencies ADA and AVAX as collateral assets on its Binance Loans platform. This means that these cryptos will be able to be used as collateral when a user wants to make a loan.
But the difference is that when taking out a loan that has ADA or AVAX as collateral assets, they will be able to be staked in order to reduce interest.
In other words, the collateral assets used to borrow are deposited in a specific wallet to support the operation of the cryptocurrency blockchain network. In return for this lock-in, the user receives rewards that allow them to reduce the interest rates on their loan.
Binance Loans is growing very actively
Binance Loans is a service launched by the platform that allows you to borrow certain crypto-currencies such as Bitcoin (BTC), Ether (ETH) or Binance Coin (BNB) for a limited period of time, usually no more than 180 days, or 6 months. All you need is a Binance account to borrow.
Like a loan agreement, users wishing to borrow must use collateral that results in some of their cryptocurrencies being tied up. Binance has added ADA and AVAX to diversify the currencies used as collateral, and thus offer a more complete service.
It should be remembered that this borrowing service of Binance should be distinguished from decentralized finance (DeFi). This is more like CeFi, as the service is based on a centralized platform. Users can gain in security with this type of loan, but the conditions are generally more rigid.
