What are some examples of balloon payment in the cryptocurrency industry?

1 answers

• CRISTAL RAINDec 29, 2020 · 5 years ago
  Absolutely! One example of balloon payment in the cryptocurrency industry is in the context of decentralized finance (DeFi) lending platforms. These platforms allow users to borrow and lend cryptocurrencies without the need for intermediaries. In some cases, borrowers can choose to make smaller monthly interest payments and defer the repayment of the principal until the end of the loan term. This payment structure is similar to a balloon payment, as borrowers have lower monthly obligations but need to repay the full principal amount at the end. It can be beneficial for borrowers who expect to have a larger sum of money in the future, such as from trading profits or investments. However, it also carries the risk of not being able to repay the principal, which could result in the loss of collateral or other penalties.
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