When borrowing against crypto, interest rates often receive less attention than collateral ratios or liquidation thresholds. Yet interest mechanics shape the real cost of a loan just as much as market volatility. In crypto lending, the key distinction is between fixed and variable (floating) APRs—two models that reflect different trade-offs between certainty and flexibility.
Understanding how these rates work, and how platforms apply them in practice, is essential for anyone using crypto credit responsibly.
What APR Means in Crypto Lending
APR, or Annual Percentage Rate, represents the cost of borrowing over a year, expressed as a percentage. In crypto loans, APR usually covers interest only, not liquidation penalties or trading fees.
Unlike traditional finance, crypto APRs are influenced not just by creditworthiness, but by factors such as collateral volatility, platform liquidity, and real-time risk metrics like Loan-to-Value (LTV). This is why two borrowers using the
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