Cryptocurrency investors are increasingly turning to borrowing tools to amplify their trading power and optimize capital efficiency. On Gate.io, two popular financial services—collateralized borrowing and margin borrowing—offer distinct ways to access additional funds using your existing crypto assets. While they may seem similar at first glance, understanding the differences in mechanics, risk levels, and use cases is crucial for making informed decisions.
In this comprehensive guide, we’ll break down how each feature works, compare their key characteristics, and walk you through step-by-step usage instructions—all while highlighting practical tips and risk management strategies.
What Is Collateralized Borrowing?
Collateralized borrowing allows users to lock up certain cryptocurrencies as collateral in exchange for a loan of another digital asset. During the loan period, borrowers pay interest but retain full control over the borrowed funds.
This method is ideal for traders who need liquidity for spot trading, margin positions, or even off-platform investments—without selling their long-term holdings.
Supported Collateral & Loan Assets
Gate.io supports a range of collateral options including BTC, ETH, USDT, EOS, and GT. The exact list of eligible collateral varies depending on the asset you wish to borrow.
For example:
- To borrow ETH, acceptable collaterals include BTC, EOS, and USDT.
- To borrow USDT, you can pledge BTC, ETH, EOS, or USDT itself.
Hundreds of cryptocurrencies are available for borrowing directly from the collateralized loan interface, searchable via the platform’s intuitive dashboard.
👉 Discover how to maximize your crypto portfolio with flexible borrowing options.
How to Borrow Using Collateral: Step-by-Step
- Search for Your Desired Asset
Navigate to the collateralized borrowing section and search for the coin you want (e.g., ETH). - Review Available Offers
You’ll see real-time data including daily interest rates (as low as 0.014% per day), annualized rates (~5.11%), and available loan amounts. Initiate the Loan
Click “Borrow” on your preferred offer. A pop-up will guide you through:- Enter the amount to borrow
- Select your collateral type (e.g., USDT)
- Adjust your collateralization ratio
- View required collateral amount
The collateralization ratio = (Loan Value / Collateral Value) × 100%.
Example: Borrowing $260 worth of ETH with $370 USDT collateral results in a 70% ratio.
- Risk Management Note
If the ratio exceeds 90% due to market fluctuations, the system will automatically liquidate part of your collateral to repay the loan. At 80%, you’ll receive warnings via SMS, email, or app notification. - Auto-Renewal Option
Enable “Auto-Renew” to extend your 10-day loan term seamlessly. The system will select the most competitive rate upon renewal.
Once confirmed, funds are credited instantly to your spot account.
Repaying Your Collateralized Loan
Loans must be repaid in full before the 10-day cycle ends if auto-renewal is disabled. Partial repayments are not supported.
Interest is calculated hourly (minimum 4 hours). You can track outstanding loans under “Pending Repayment,” where details like accumulated interest and current collateralization ratio are displayed.
To repay:
- Click “Repay” next to the loan
- Confirm with your funding password
- Upon success, your collateral is released back to your spot wallet
🔒 Important: While borrowed, collateral cannot be withdrawn and remains locked until repayment.
Understanding Margin Borrowing on Gate.io
Unlike collateralized borrowing, margin borrowing is designed specifically for leveraged trading. It enables users to borrow funds against a margin deposit, achieving leverage of 2x to 10x depending on the trading pair.
For instance, depositing 1 BTC could allow you to borrow an additional 2 BTC (for 3x total exposure). This amplifies both potential gains—and risks.
Key Differences from Collateralized Borrowing
| Feature | Collateralized Borrowing | Margin Borrowing |
|---|---|---|
| Max Leverage | <1.7x | Up to 10x |
| Interest Rate | From 4% APR | From 3.65% APR (0.01%/day) |
| Risk Level | Lower | Higher |
| Use Case | General liquidity | Leveraged trading |
Margin borrowing carries significantly higher risk due to tighter liquidation thresholds and amplified volatility exposure.
How to Use Margin Borrowing: Full Walkthrough
- Access the Margin Platform
Visit the margin borrowing page and select your desired trading pair (e.g., BTC/USDT). - Transfer Margin Funds
Click “Transfer” to move assets (e.g., 100 USDT) from your spot wallet to the margin account. - Check Borrowing Capacity
For BTC/USDT (up to 10x leverage), a 100 USDT deposit allows borrowing up to 900 USDT—giving you 1,000 USDT in total buying power. - Borrow Funds
Choose a competitive lending offer (e.g., borrow 400 USDT at 5x leverage), enable auto-renewal if needed, then confirm with your password.
Your available balance updates immediately:
- Usable: 500 USDT (100 own + 400 borrowed)
- Remaining borrowable: ~499 USDT (after interest)
👉 Learn how top traders manage leverage safely across multiple platforms.
Managing Risk: The Role of Risk Rate
The risk rate determines your margin account’s health:
Risk Rate = Total Asset Value / Borrowed Asset Value × 100%
As losses accumulate, this rate drops:
Warning Threshold:
- 3–5x leverage: Below 130%
- 10x leverage: Below 110%
Liquidation Trigger:
- 3–5x leverage: Below 110%
- 10x leverage: Below 105%
Stay above these levels by adding more margin or reducing position size.
Repaying Margin Loans
Repayment follows a process similar to collateralized loans:
- Go to your active margin orders
- Click “Repay” on the relevant entry
- Confirm with your funding password
After repayment, borrowed funds are settled, and remaining assets stay in your margin wallet for future trades.
Collateralized vs. Margin Borrowing: Which Should You Choose?
Here’s a clear comparison to help you decide:
| Aspect | Collateralized Borrowing | Margin Borrowing |
|---|---|---|
| Purpose | Access liquidity | Amplify trading positions |
| Max Leverage | ~1.7x | Up to 10x |
| Interest Rates | Starts at ~4% APR | Starts at ~3.65% APR |
| Liquidation Risk | High at >90% collateral ratio | Varies by leverage (as low as 105%) |
| Supported Currencies | Limited collateral types | Hundreds of options |
| Flexibility | Funds usable anywhere | Restricted to margin trading |
Who Is It For?
- Beginners: Start with collateralized borrowing for lower-risk experimentation.
- Experienced Traders: Use margin borrowing strategically for high-conviction plays.
- Long-Term Investors: Leverage collateral loans to avoid taxable events when accessing cash flow.
👉 Compare real-time borrowing rates and find optimal entry points today.
Frequently Asked Questions (FAQ)
Q: Can I use borrowed funds outside of Gate.io?
A: Yes—for collateralized loans, funds go directly into your spot wallet and can be withdrawn or used freely. Margin loans are restricted to trading within the margin system.
Q: What happens if my collateral value drops suddenly?
A: If your collateralization ratio hits 90%, automatic liquidation occurs. It's wise to monitor ratios closely or maintain conservative margins (e.g., 60–70%).
Q: Are there penalties for early repayment?
A: No. Both loan types allow early repayment without fees. Interest is charged only for hours used (minimum 4 hours).
Q: How often do interest rates change?
A: Rates fluctuate based on supply and demand in the lending pool. Auto-renewal selects the best available rate at each cycle.
Q: Can I borrow one asset and repay in another?
A: No. Repayment must be made in the same currency that was borrowed.
Q: Is there a minimum borrowing amount?
A: Yes—minimums vary by asset but are typically small (e.g., 0.001 BTC or 1 USDT), making it accessible even for smaller accounts.
Final Thoughts
Both collateralized borrowing and margin borrowing empower users to unlock value from their crypto holdings—but they serve different strategic purposes.
Choose collateralized borrowing when you need flexible liquidity with manageable risk. Opt for margin borrowing when executing high-leverage trades with tight risk controls in place.
Regardless of your choice, always prioritize risk management, monitor key metrics like collateralization and risk rates, and consider starting small before scaling up.
Whether you're exploring new investment avenues or refining your trading toolkit, understanding these mechanisms gives you a significant edge in navigating the evolving crypto landscape.