Categories: Cryptocurrencies

How to get an instant loan using your Maker?

(Last Updated On: )

A fact that can never be disassociated from cryptocurrency is its overwhelming price fluctuations. It is a challenge that affects any usage of crypto assets, be it trading, exchange or investments. However, this volatility has been tackled with the emergence of more stablecoins and the increasing value of crypto lending on decentralized lending platforms. 

MakerDao is one of the top decentralized lending platforms that allow investors to obtain loans while enjoying a low-risk interest on assets used as collateral. The platform supports two currencies which include Maker and Dai. Maker is a utility and governance token on the platform which allows users to take out a loan in the form of Dai – a stablecoin pegged to the US Dollar. Rune Christensen created it to give its holders the power to participate in all decision-making activities and manage one of the largest and most popular stablecoin – Dai.

Maker is worth $2,110.61, with a market cap of $2.08B, and there are about 985,552 MKR in circulation. What’s more is that it’s a counterweight for price fluctuations that may affect Dai, and it is projected to grow from its 2021 current price to a minimum of $9,460.97 and a maximum of $11,390.20 by 2025. For investors unfamiliar with Maker, this article would give a comprehensive guide on everything you need to know about Maker, how to lend Maker, and how to get an instant loan using your Maker.

What is a Maker loan?

Maker loan gives investors access to mint tokens like Dai while staking ETH as locked up collateral. The loan is backed by another asset that is sold in a case of default or if the collateral price drops below a certain degree. 

Why take a Maker Loan?

If you’re wondering why it is important, the following are some reasons to take a Maker loan:

1. It is Permissionless

This loan allows investors to autonomously get instant maker loans with no credit checks or any KYC requirements that are identified with traditional loan systems to get started. Additionally, the maker loan requires no verification, and all lending processes don’t involve a third party. 

2. Alternative Solution to Selling Assets

As crypto enthusiasts are constantly encouraged to “HODL” assets, taking a Maker loan is a viable way to put unused assets to good use. In addition, taking a Maker loan helps to unlock the values of the stored asset used as collateral.

3. Gives a Significant Access to Dai

Since October 2020, Dai has grown in value due to its utility throughout the Defi ecosystem. With over $800 million in market capitalization, minting Dai through Maker loan is a good proposition. Additionally, if you lock up your Dai with Dai Savings Rate (DSR), you get to earn interest on the locked Dai, all of which is done via Maker smart contract.

4. It is Relatively Cheaper

Comparing other forms of leverage shows that taking a Maker loan is relatively cheaper. The interest rate for a Maker loan is 0.5% which is way below what investors pay on other CeFi lending platforms. 

Steps to getting a Maker loan

While the entire process of taking a Maker loan is facilitated by smart contracts run on the Ethereum blockchain, the following are steps to getting an instant  Maker loan:

The first step is to log on to CoinRabbit. Once you’re here, just below “Get profit on rising market”, you’ll see an option requesting a collateral amount which could be in Ethereum, Bitcoin, or Bitcoin Cash. Click on the Maker loan option. Right below it, you’ll get the equivalent of the deposit in loan you wish to borrow.

After this, click on “Get Loan” and you’ll be directed to a fresh page where you’ll be required to confirm your loan. Here you’ll see your loan, your deposit, and the entire loan details which include loan term, monthly interest rate, price down limit, and annual interest rate.

After this, you’ll be required to enter and verify your phone number. On the same page, you’ll be required to input the address you’ll receive your loan USDT or USDC. Then you’d confirm the terms of use and privacy policy.

Once this is completed, wait for a few minutes for the loan to be processed after which you’d get your loan instantly. Once you have your USDT or USDC, you can convert to whatever cryptocurrency you want, for whatever purpose you want. 

What crypto can I use for collateral?

As there is always a possible default in a loan agreement, every lender requires some form of security against risks. This security is known as collateral. It reassures every lender that the borrower will pay back whatever loan is obtained.

With the recent Maker protocol upgrades from single collateral Dai to a multi collateral Dai, Maker accepts coins like Ethereum, BAT, and WBTC. However, ETH remains the most popular collateral to get a Maker loan instantly.

The following are cryptocurrencies supported as collateral on CoinRabbit:

These collaterals are kept safe in special wallets that require private keys. These private keys for the special wallets are renewed monthly to improve security. And you can get your collateral back as soon as your loans are paid along with the accumulated APR.

Final Thoughts

With expert projections and the base Maker has created in recent years, it remains one of the most promising projects in the crypto world. So while “DYOR” is important, taking a Maker loan offers a great proposition you can benefit from.

Dan Marsh

Hey! I'm Dan, CoinRabbit's blog manager. In addition, I am a crypto enthusiast and supporter of new technologies that should replace the old and decrepit system. I hope you will be satisfied with my articles. Have a good day, let's meet on the vastness of this wonderful blog.

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