Repayment is a process of returning money that has been previously borrowed or received as payment for goods and services. In the cryptocurrency context, repayment usually refers to paying back funds which have been loaned out in the form of crypto-assets, such as Bitcoin or Ether.
Cryptocurrency loans are becoming increasingly popular with investors looking to maximize their returns from digital assets without having to sell them off. Through these loans, holders can use their holdings as collateral and receive cash in exchange for temporarily giving up ownership of those assets. Repayment occurs when the borrower pays back the loan amount plus interest using either fiat currency (e.g., USD) or cryptocurrency (e.g., BTC).
The repayment process generally involves a few key steps:
1) The borrower and lender agree on terms such as loan duration, APR (annual percentage rate), collateral requirement etc;
2) The borrower sends an appropriate amount of crypto-assets to serve as collateral;
3) Once both parties agree on all terms, the lender transfers an agreed upon sum in either fiat currency or cryptocurrencies;
4) At some point during or after this transfer, repayment must occur within an agreed timeframe by sending either fiat currency (if originally borrowed in fiat currency) or cryptocurrencies (if originally borrowed in cryptocurrencies);
5) After successful repayment is made, any remaining collaterals are returned back to the borrower’s wallet address along with any applicable interest payments due from the lender.
