What is collateral and why do I need it?

What is collateral and why do I need it?

What Is Collateral?

The term collateral refers to an asset, in this case BTC or ETH that Nebeus accepts as security for a loan. The collateral acts as a form of security for Nebeus, the lender. In the event, a borrower doesn't pay back their loan it can be used to recoup losses if any.

Why do I need it?
Before Nebeus issues you a loan, it wants to know that you have the ability to repay it. This security is called collateral and It helps to ensure the loan is repaid. In the event the loan isn't paid back, Nebeus can liquidate the collateral, applying the money it gets to the unpaid portion of the loan. The remaining portion, if any, is automatically added to your wallet.

To have the option to recover your crypto, you need to select "When crypto prices are falling" before complete your loan agreement, otherwise the system will act automatically and sell your crypto to recover the loan.

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