Collateral

Collateral is an asset that a borrower offers to a lender as security for a loan or transaction. This asset can be seized by the lender if the borrower fails to meet the repayment terms. In the context of a crypto/fiat exchange, collateral might be in the form of cryptocurrencies or fiat currencies. It ensures that the lender has a form of security, minimizing the risk of lending. By using collateral, borrowers may access loans or trades they might not otherwise qualify for, often at better terms.