Credit Line

Definition ∞ In the context of digital assets, a credit line refers to a pre-approved amount of cryptocurrency that a borrower can access as needed. Unlike a traditional loan with a fixed disbursement, a credit line permits flexible withdrawals up to a specified limit. Interest is typically accrued only on the amount utilized. This financial tool provides flexible access to capital.
Context ∞ Credit lines are increasingly available within both centralized and decentralized lending platforms, offering users adaptable financing solutions against their digital asset collateral. News often highlights the terms, collateral requirements, and associated risks of these credit offerings. The development of undercollateralized or uncollateralized credit lines in DeFi represents a significant area of innovation.