Bitcoin Suisse has announced the launch of the so-called Staking-Backed Loans, i.e. loans secured by staked funds.
Thanks to this new feature, customers of the Swiss exchange who staked DOT (Polkadot), XTZ (Tezos), DASH (Dash) and ADA (Cardano) can then use them as collateral to obtain loans in fiat currency, such as Swiss francs, euros, US dollars, British pounds or Danish kroner, or in BTC and ETH.
According to Bitcoin Suisse, this would be the world’s first-ever loan offer of this kind, but with a minimum limit of 100,000 USD.
In fact, there are already loans that can be obtained, even in fiat currencies, by locking cryptocurrencies as collateral, and of course there are already several exchanges that offer the possibility of earning money by staking.
How the Staking-Backed Loans of Bitcoin Suisse work
What Bitcoin Suisse’s Staking-Backed Loans do is combining the two, so that those who want to obtain loans in this way can earn a return on the collateral they lock.
The exchange has been offering secured loans in cryptocurrencies for two years now, and now that the popularity of Proof-of-Stake (PoS) based blockchains is increasing, it has decided to add these new types of loans to its offer, as demand for staking cryptocurrencies to validate transactions within PoS-based networks is growing.
Moreover, with this new service, it is also possible to obtain loans in BTC and ETH, giving as collateral other cryptocurrencies such as DOT, XTZ, DASH or ADA, and having them generate returns through staking.
The founder and president of Bitcoin Suisse, Niklas Nikolajsen, said:
“Interest in our staking service has increased over the past few months, but we also see that clients need flexibility while their holdings are locked in staking protocols. That’s why we reacted quickly to bring this new service to market”.
The cryptocurrency locked as collateral is stored in the Swiss Crypto Vault, and the service is particularly targeted at those who need large amounts in long-term loans.
The exchange informs that collateral is kept in separate accounts, as opposed to those used on the exchange, and remains locked as long as the credit is active. In addition, considering that the value of such collateral fluctuates, it may be withdrawn or supplemented over time.