Nebeus is a loan platform backed by crypto that allows crypto investors to obtain a cash loan using crypto assets as collateral, like bitcoins. It's simple, yet risky due to margin calls. If the cash value of your coins falls, you may need to make some adjustments by pledging more crypto. A lender is able to liquidate your crypto account or trigger automatic payments if a payment is missed. In spite of these risks, crypto loans can be a lifesaver when you need cash but are not ready to sell your crypto.
For Nebeus loans, you can use crypto as collateral to cover the amount of the loan. You can think of your crypto as loan insurance since you are committing to a constant value when taking a crypto-backed loan. However, margin calls can occur, causing your crypto to drop in value. This means the value of your crypto collateral drops below the required level to rebalance the ratio of the loan-to collateral.
During a margin call, the lender requests that the borrower either sells some of the assets they pledged or puts up additional collateral so the minimum value is reached. This is known as a maintenance margin. For this reason, it's a good idea to leave some extra crypto in your wallet that Nebeus can add the appropriate margin automatically to maintain your loan if the price drops. In contrast, Nebeus will also return any extra crypto to you should the market rise.
If you can't or don't want to contribute more crypto, then you have the option of contacting Nebeus' support team to close your loan. If Nebeus doesn't hear from you, then they will continue to liquidate your crypto collateral as a last resort. Your remaining crypto will be returned to you. If your loan is getting close to a margin call, Nebeus will send you an email to notify you that your crypto is at risk.
Crypto-lending companies like Nebeus use margin calls to help protect a lender's capital. Keep in mind that lenders of cash loans using cryptocurrency also carry a risk. To provide cash loans to borrowers, lenders must ensure the security of their capital. Thus, borrowers are also exposed to risks and the possibility of having to pledge additional crypto.
More risks to consider include:
With Nebeus, you get a free and unique benefit. You get 10 days of margin call protection. Unlike other crypto-backed loan lenders like Celsius that only give you 24 hours to act in the case of a margin call, Nebeus gives you 10 days to make a decision without feeling rushed. This gives you time to escape liquidation even if you don't do anything in regard to a margin call.
Some of your options will include:
If prices of your crypto should rise within the 10 days during the margin call, Nebeus cancels the margin call automatically, and your loan will continue as usual. If you haven't responded after 10 days, your collateral is liquidated and your balance is refunded to your account. Contact us to learn more.
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