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A default is not possible. The loans are fully secured by Ethereum. If collateral dips below an acceptable threshold, the collateral is liquidated and the debt
by vinniejames 7y ago
A default is not possible. The loans are fully secured by Ethereum. If collateral dips below an acceptable threshold, the collateral is liquidated and the debt is payed back to the system in full
- TylerE 7y agoWhat’s the point of the loan then? Why not just use the collateral at 0%?
- v64 7y agoI said this in another comment below: > If you sell the Ether, you no longer have the Ether. If while you're holding the loan the price of Ether goes up, you benefit from that. Of course, if the price of Ether goes down, you're at risk of having your loan liquidated, but that's a requirement imposed by the system to maintain the Dai peg.
- fourtens 7y agomaybe they want to leverage? take out a loan secured in eth, and use that loan to buy more eth