Loan #Margin token (part 2)
🚨Th2: Collateral #StableCoin loan out Coin
(Contrary to TH1, but many people will wonder why not use stable coins to buy coins directly instead of collateralizing to get coins, which incurs interest....)
In fact, this is the Short Selling technique in financial investment.
For example: you have 1000 usdt and use it as collateral to borrow 10 BTC (assuming 1 BTC = 100 usdt). Thus, you are in debt to the exchange for 10 BTC.
After borrowing, you sell 10 BTC immediately and receive 1000 usdt. After a while, the price drops to 1BTC= 80 usdt, you use the 1000u from selling BTC earlier to buy back at the current price, a total of 10BTC is 800u and repay the loan 10$BTC to the exchange, thus you have made a profit of about 200u thanks to short selling.
This technique is commonly used when the coin price is at its peak, a whale collateralizes stablecoin to borrow coins on Lending and Borrowing platforms, meaning the whale is #bearish and is "shorting" or "hedging short" positions to ensure the profit level of the spot that has been purchased earlier.
