A few years ago, many people doubted the idea of crypto loans. Today, decentralized finance (DeFi) is here to stay, meaning lending and borrowing has become normalized in the cryptocurrency universe. Binance leads others when it comes to crypto-backed loans – its loans are being used by numerous individuals who believe in the potential of blockchain technology and want to gain access to extra crypto capital.
Though crypto loans are becoming popular, there are still restrictions in the industry. For instance, most crypto lending platforms only allow users to borrow and use funds within their ecosystem or blockchain. Cross-chain bridge tokens, until recently, were never in the equation. With Binance Loans, though, it is now possible to obtain such loans.
First Things First – What Is Binance Loans?
Before discussing the possibility of borrowing cross-chain bridge tokens on Binance, it is important to consider what Binance Loans is. Put simply, Binance Loans is a crypto loan platform operated by Binance. In essence, it enables crypto users (more specifically, Binance users) to easily borrow Bitcoin, Ethereum, and other popular cryptocurrencies.
As a loan platform, Binance Loans allows users to borrow a variety of assets while using their crypto deposits as collateral. The beauty of Binance loans and other similar platforms is that they allow crypto users to obtain loans for different purposes with minimal risk. Binance Loans, in particular, offers several benefits to crypto enthusiasts.
Here are some of the key benefits of using Binance Loans:
- You can use the borrowed asset anywhere and in any way you deem fit
- Binance Loans supports a wide range of assets for borrowing and as collateral
- Binance charges no transaction fees for borrowing
- Loan Staking can be used to reduce interest payments
- You will enjoy flexible loan terms and repayment options
What Are the Advantages of Using Binance Loans?
Binance Crypto Loans dashboard.
While the list of platforms that offer crypto-backed loans continues to grow, it is important to note that these platforms are not all equal. It is difficult to find a platform that ticks all the boxes when it comes to what users want, but Binance Loans, in this writer’s opinion, comes as close to being an ideal crypto loan platform as possible.
Without further ado, here are some of the advantages of using Binance Loans:
Enjoy the Value of Your Crypto Without Selling It
For most people, this is the first and most significant attraction to crypto-backed loans in general, and Binance Loans in particular. You can utilize the value of your asset, be it Bitcoin, Ethereum, BNB, or any other cryptocurrency. You just need to use it as collateral to get a loan that you can use in different ways.
When you use your digital assets to secure a Binance loan, they will only be locked for the duration of the loan. Throughout the period, you can use the borrowed assets in different ways, with the possibility of generating significant returns. You can even use loans secured with your crypto to generate a significant amount of passive income, via services such as Binance Simple Earn.
No Transaction Fees
Obtaining crypto-backed loans from some platforms can come at a steep cost. Transaction fees always apply, and in some instances, they are high. This is not the case with Binance loans. In fact, using Binance Loans does not attract any form of transaction fee.
It is important to clearly state here that Binance loans are offered at a competitive interest rate. This is not the same as transaction fees. Binance doesn’t charge any fees on borrowings, and the interest rates are normally low.
Repay At Any Time
Binance Loans offers the highest level of flexibility in the market. It gives users full control over how they handle borrowing and repayments. Interest rates are also calculated based on when the loan is repaid. The implication is that you can choose to repay at any time without penalty.
People will need to really use Binance Loans to appreciate its flexible loan terms and repayment options. These favorable terms allow experienced crypto users to make the best of their Binance Loans, paying back their loans when it feels comfortable and more profitable to do so.
Use the Borrowed Funds Anywhere
As hinted earlier, many companies that offer crypto-backed loans put restrictions on the usage of borrowed assets. This means that when you borrow from their platform, you will have to use it there for specific things. This is not the case with Binance Loans. Users are at liberty to use their borrowed crypto anywhere they want.
The variety of assets available to potential borrowers is another interesting thing to consider. It is possible to use Bitcoin and other popular coins to borrow stablecoins. Of course, this opens up worlds of opportunities within the Binance platform and elsewhere.
No Credit Score Checks
Unlike in traditional finance, where lenders are judged by credit scores, crypto-backed loans are available to everyone on most platforms. Binance Loans, in particular, are easily accessible to Binance users, and they are not discriminated against based on credit scores or similar criteria.
Being able to obtain substantial crypto-backed loans without credit score checks will open up several opportunities for you. If you understand how Binance Loans works and what you can use them for, it becomes really easy to borrow funds that you can use to generate more funds.
What Is a Cross-Chain Bridge Token?
To understand what cross-chain bridge token means, we need first to consider what cross-chain bridges are. Also called blockchain bridges, these are pieces of software that facilitate cross-chain liquidity between separate blockchains, thereby increasing token utility.
In simple terms, cross-chain bridge tokens are tokens that have multi-chain utility, meaning that they can be used on different blockchain networks. They are mostly created when tokens are burnt or locked through a smart contract on one platform and then unlocked or minted through another smart contract on the destination chain.
Binance Bridge is ranked first among the top cross-chain bridges that connect multiple blockchains. It connects with Ethereum and allows users to convert tokens into and back from Binance Chain and compatible formats. Binance Bridge mostly allows the conversion of ERC-20 tokens as well as a few other coins on such networks as ATOM, LINK, XRP, and ONT.
Can You Borrow Cross-Chain Bridge Tokens on Binance?
Now that we’ve fully discussed what Binance Loans mean and what cross-chain bridge tokens mean, it is time to answer the titular question, “Can I borrow cross-chain bridge tokens on Binance? The simple answer is ‘yes’. However, there may be a limit to what you can find to borrow.
At the time of writing, BETH is the only cross-chain bridge token that can be borrowed on Binance Loans. BETH is basically a tokenized version of staked ETH (Ethereum) on Binance. It is mostly used by users that wish to participate in staking on the ETH 2.0 Beacon Chain and earn ETH 2.0 staking rewards on Binance. It has several other uses within the Binance platform and the BNB Smart Chain (BSC) ecosystem as well.
How to Borrow BETH
If you want to borrow BETH on Binance Loans, follow the steps below. Keep in mind that the process of borrowing BETH is virtually the same as borrowing any other crypto on the platform.
Step 1: Log in to your Binance Account
First, you’ll need to log in to your Binance account. If you haven’t yet registered a new Binance account, you must first do so to proceed to the next step.
Step 2: Open Crypto Loans
From the Finance menu, select Crypto Loans.
Step 3: Select BETH and stake your crypto as collateral
Select BETH from the many options and set other parameters like collateral, loan duration, and other details.
Step 4: Confirm the loan and borrow BETH
Confirm the details and click Start Borrowing Now, then Confirm the confirmation dialogue than appears.
The steps are similar in both desktop and mobile Binance clients. However, you may need to click More before clicking Crypto Loans when using the app.
The best crypto loans are available on Binance Loans, at least in this writer’s opinion. For years, Binance has been facilitating crypto-backed loans, accepting a wide range of crypto as collateral, and allowing users to borrow from a wide array of coins. Binance Loans even supports the borrowing of cross-chain bridge tokens so that you can borrow BETH and other coins in this category.
Here, we’ve covered everything you need to know about borrowing cross-chain bridge tokens from Binance Loans. It is important, however, that you understand what you intend to do with cross-chain bridge tokens before borrowing. Always do your due diligence before borrowing or entering a trade.