Decentralized loans are a type of financial transaction with cryptocurrency, the transfer of tokens under the obligation to return.
The blockchain protocol can contain different transaction options: the loan can be secured or unsecured by other assets, issued at interest or without interest.
Features that distinguish it from a simple bank loan:
- the service is available around the clock from anywhere in the world;
- has a high operating speed;
- may not have a credit score.
A type of decentralized loan is a “flash loan” — a loan that is issued for a single transaction. In this case, the algorithm of actions may look like this: take a loan — buy tokens with it — sell tokens — return the loan.