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by RustyConsul
1519 days ago
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Four risks with margin loans. The first two also apply with crypto: 1.) Amplified losses if the securities in your account decline in value 2.) Margin calls or liquidation of securities 3.) Losses greater than the original investment are possible - Not possible due to constant access via oracles to the underlying asset. The Protocol may experience more loss in very rare instances, but as an individual i never will.
4.) Interest rates may rise, increasing the cost of your loan.And due to 3.) is why you have an 'interest rate'. I have no rate of interest on my margin loan. The protocol generates money from trade fees, more liquidity is and leverage increases TVL. |
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