Sometimes, you want to buy crypto but you don’t have enough money to buy it. In this case, you go for an option called a loan, in the loan process you just need to borrow crypto from crypto lenders. But there is a main concern “Loan Security”, which is very important for the crypto lenders. Crypto lenders only issue loans when you have enough digital assets to lock as security. Like, to borrow the crypto you must have another token such as SPELL to make sure of the loan security. Well, in this article we will conduct a brief discussion on “SPELL Tokens” and “Crypto Lending”. So, without wasting time let’s deep dive into it!
What is SPELL Token?
SPELL is a type of ERC-20 token that is used in the spell network. The spell is a decentralized network on the Ethereum blockchain that offers the services of borrowing and lending by utilizing cryptocurrencies. SPELL tokens are used in the spell network to perform transactions and also have a variety of other use cases such as SPELL tokens as collateral which means you can utilize SPELL tokens as security to borrow other cryptocurrencies (USDT, USDC, and others). Spell network has a variety of key features such as:
- Smart Contract: Spell networks perform the borrowing and lending tasks with the help of smart contracts, which means it eliminates the central point of authority or intermediaries. A smart contract is a set of predefined conditions in the form of code that is embedded into the system to run it. When the defined condition meets, the smart contract is executed automatically.
- Governance Feature: One of the most exciting features of Spell network is governance features. With this feature the actual users of this specific network can vote or participate in the development of the network, they are completely free to give their opinions and suggestions to make the network advanced.
- Liquidity Mining Program: This program is initiated by the spell network, in which the user provides a liquidity platform by lending the stablecoins, and in return, they can earn SPELL tokens as a reward. So, this feature facilitates the investors to earn SPELL tokens with just a few clicks.
What is Crypto Lending?
Crypto lending is the process that allows users (individuals or companies) to borrow cryptocurrencies by using any other digital assets as collateral. For instance, you want to buy cryptos such as Bitcoin, Ethereum, or any other but you don't have enough money to buy it. In this case, you will go for a loan and you will borrow cryptocurrency. To make the loan secure you need to utilize some of your digital resources such as SPELL tokens, as collateral. This means to borrow crypto, you must have to lock SPELL tokens or others as security to secure the loan, and on the other hand crypto lenders can earn interest on their digital assets.
The process of lending and borrowing is always done between two parties. Both parties have to agree on a single point, so that's why all the settlements between borrowers and lenders are done on behalf of the smart contract.
Overall, SPELL Tokens and Crypto Lending are parallel with each other. SPELL tokens are ERC-20 tokens that utilize the spell network to borrow various cryptocurrencies such as Bitcoin, Ethereum, and others. Crypto lending means the person who issues their digital assets as a loan but to secure the loan crypto lenders always require a loan security. To secure the loan security the borrower can lock SPELL tokens, and in return can borrow the crypto. As a result, the lender can earn interest by lending their digital assets.