What Are Crypto-Backed Products and How Do They Work
Many people hold cryptocurrency hoping its value will grow over time. But sometimes you need access to funds right now. Selling your assets isn’t always ideal — the market might rebound, or you may simply want to keep your portfolio intact. In such cases, crypto-backed products can be a practical option.
Here’s the basic idea: you use your crypto as collateral and get access to liquidity in stablecoins (digital assets with a fixed value, such as USDT). Your crypto remains in your portfolio, without being sold or locked away permanently.
How it works
To access stablecoins, you need to provide collateral — usually an amount higher than what you receive. For example, to access $1,000 in stablecoins, you might need to deposit around $1,500 worth of crypto. This is called overcollateralization. It helps protect against sudden market swings.
If the value of your crypto falls, there’s a risk of liquidation — meaning part of the collateral might be sold to cover the position. That’s why it’s important to monitor prices and add collateral in time.
Types of services
There are two main formats:
- Centralized (CeFi). These platforms are managed by companies. They usually offer user support and require identity verification (KYC). Your assets are stored on the platform’s side
- Decentralized (DeFi). Everything operates through smart contracts, without intermediaries. No documents are needed, but you’re fully responsible for your wallet’s security
When it can be useful
Crypto-backed products can come in handy in different situations. For example, when you need quick access to liquidity but don’t want to sell your crypto. Or if you believe in the asset’s long-term growth and prefer to keep your holdings while still using their value temporarily.
This approach can also be helpful for seizing new opportunities — it allows you to access liquidity without parting with your existing crypto. Keep in mind: as with any financial instrument, crypto involves risks. Prices may fluctuate, and both smart contracts and centralized platforms are subject to technical or regulatory limitations.
How to stay safe
- Carefully read the platform’s terms and conditions
- Choose reliable and verified services
- Use only assets you’re comfortable locking as collateral
- Keep an eye on market prices to maintain your collateral in time
Coinhold OnLock by EMCD
EMCD offers the Coinhold OnLock service, which allows users to use crypto assets as collateral and access liquidity in USDT.
What makes OnLock convenient
- Clear terms — fixed commission and transparent rules (in accordance with the platform’s conditions).
- Flexibility — terms from 7 to 60 days, with the option to close earlier without extra fees.
- Simple interface — everything is handled online through your personal dashboard.
- 24/7 support — you can reach out anytime with your questions.
In this way, Coinhold OnLock helps you keep your crypto while still getting access to funds when needed.
You can find full details on terms, risks, and the user agreement on the website.
Disclaimer: The information provided does not constitute investment advice. Using crypto-backed instruments involves risks, including potential loss of funds.
