Want to borrow money without selling your crypto? Then you need to understand how collateralized loans work. They’re one of the core building blocks of decentralized finance (DeFi), and at CapyFi, we want everyone to take advantage of them—no advanced knowledge required.

A collateralized loan is a loan that’s backed by an asset you already own—called collateral. In order to borrow, you first need to deposit something of higher value than the amount you want to borrow.

Simple example:If you want to borrow 100 USDC, you’ll need to deposit something like ETH worth at least 150 USDC as collateral. That ETH stays locked while the loan is active.

This model is different from traditional banks because:

• You don’t need a credit score or financial history.

• There are no intermediaries—it’s all managed by smart contracts.

• It’s transparent and accessible globally.

Great question. It’s all about protecting the system (and other users) from price volatility.

Crypto assets can change value quickly. If the value of your collateral drops too much, your loan becomes “risky.” To avoid losses, the protocol sets a collateralization ratio (e.g., 150%). If your position falls below this threshold, your collateral may be automatically liquidated to repay the debt.

CapyFi is a DeFi platform that allows users to access collateralized loans in just a few steps:

1. Deposit a crypto asset as collateralFor example, ETH, wBTC, USDC, USDT, wARS, or RPC.

2. Borrow a supported assetLet’s say you borrow USDC. The smart contract calculates how much you can borrow based on the value of your collateral.

3. Your collateral stays locked during the loanIt’s still yours—you just can’t move it until the loan is repaid.

4. Repay whenever you wantYou pay back the borrowed amount + interest, and you get your collateral back.

5. **If you don’t repay and the value drops too much...**Your collateral may be partially liquidated to cover the loan.

⚠️ CapyFi shows you your loan status and risk level in real time—so you’re always in control.

The interest rate you pay depends on several factors:

• Supply and demand of the borrowed asset.

• Market conditions.

• CapyFi’s internal economic model.

Rates update automatically and you can always see the current rate before borrowing.

There are many reasons why users choose this kind of borrowing in DeFi:

• Get liquidity without selling your assetsIf you believe your crypto will increase in value, you can borrow without selling it.

• Use the loan for other opportunitiesSuch as trading, staking, buying more crypto, or participating in another protocol.

• **Tax optimization (in some countries)**Taking a loan may have different tax implications than selling your crypto.

Collateralized loans are a powerful, transparent, and permissionless tool in the crypto space. At CapyFi, we’re focused on making them easy to use and accessible for all.

Ready to try it?Connect your wallet, deposit your crypto, and get your first loan in just minutes—no paperwork, no banks.

Know more at www.capyfi.com