NOTE:
We have made the difficult decision to suspend all withdrawals, trading, and deposits on the Vauld platform with immediate effect. We believe that this will help to facilitate our exploration of the suitability of potential restructuring options, together with our financial and legal advisors. We seek the understanding of customers of the Vauld platform that we will not be in a position to process any new or further requests or instructions in this regard.
To read more about this, please visit: https://support.vauld.com/en/collections/2888465-vauld-announcements-and-faqs
This is a natural question most us have!
While thinking about crypto loans and interest one has to shed constantly thinking about the dollar value of the crypto assets involved. In the same way that a loan of USD results in USD principal and interest, a crypto loan means a crypto principal and interest. You don't constantly convert a USD loan's amounts to what it means in terms of another currency or asset. The value of a USD varies in terms of its buying power. For instance, $50,000 may be able to buy you a certain car today but in a few months, the same $50,000 may not be enough to buy the same car. Assuming that the quality of the car has remained unchanged, this means that the purchasing power of the USD has dropped. During this same period, a loan of USD will continue operating according to its original terms with interest due in USD, regardless of the change in the purchasing value of the dollar. You consider USD to be an absolute value and deal in terms of that currency.
Similar thinking needs to be applied to a crypto loan. A BTC loan results in BTC principal and interest. Regardless of BTC's dollar value, the loan and interest will be calculated as is since the loan operates in a purely crypto world, independent of its dollar equivalent. Thus, regardless of the value of a cryptocurrency, a loan in terms of it will continue operating as predefined.