Collateral
What is collateral and how can domains serve as collateral in DeFi?
Published on June 30, 2025By Namefi Team
- glossary
Collateral is an asset pledged as security for a loan, which the lender can seize if the borrower defaults. In traditional finance, collateral might be real estate, vehicles, or other valuable assets. In DeFi and Web3, collateral often consists of cryptocurrency or other digital assets locked in smart contracts. Tokenized domains can serve as collateral due to their verifiable ownership, transferability, and often substantial value. A premium domain NFT like crypto.com or defi.xyz could be used to secure loans, participate in leveraged trading, or access other financial services—all while maintaining the domain's utility and potential for appreciation.
Related keywords
- collateral
- security
- lending
- borrowing
- domain collateral
- DeFi