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Credit plays a very significant role in the economy. It helps to ensure that an economy's financial cycle is always in motion. It is also a means through which individuals can raise capital and pay it back later. Businesses also make use of credit for the purchase of goods and services. When the purchased goods are sold, profits are made which are then used to repay the debt. In fact, anybody for various reasons can take a loan and pay it back over time.
For credit to be easily accessible by those who need it, some kind of incentive is usually involved for creditors. Most times, the incentive is in the form of interest which creditors charge borrowers. In this write-up, we will discuss everything you need to know about interest rates.
Interest rate is a commonly used phrase used in the financial world. However, what is interest? Interest is a financial incentive owed by a lender to the borrower. It is the cost incurred by a borrower for borrowing money. For instance, if Jackson decides to lend Jonathan some amount of money, say $5000, they may have an agreement that the refund would be at 5% interest. This means that Jonathan will have to repay the $5000 plus an extra 5% of the borrowed sum. That is, he will pay back $5250 to Jackson.
Having understood what interest means, we can easily deduce what interest rate is. Interest rate is simply the proportion of a loan charged as interest with respect to time. Therefore, if Jackson's interest rate is 5% per year, Jonathan would have to pay the sum of $5250 in the first year.
Interest rates are termed either simple or compound. Using the earlier illustration, simple interest maintains the same rate for subsequent years, that is, 5% interest every year ($5250 yearly). In contrast, compound interest charges interest on the initial principal and accumulated interests from earlier intervals. For example, 5% of the $5250 from the first year gives $262.5. Hence, if the loan is for two years at 5% compound interest, $262.5 will be the interest for the second year rather than $250.
Now, let us explain the critical role interest rates play in an economy. In commercial banks, all transactions revolve around borrowing and lending. Anyone who deposits money is a lender. As banks pay other people, you receive interest because your deposits are, in principle, lent to other people. You also pay interest to the bank each time you borrow money.
Although banks charge and pay interest, they do not have the flexibility to set these rates. Only Central Banks have the right to do so. By increasing or decreasing interest rates, a Central Bank can regulate the economy. If the interest rates are increased, more interest will accrue to you if the bank lends out your money. The downside is the higher cost incurred by those who want to borrow. Therefore, when interest rates are high, it is expensive to borrow but profitable to lend.
The reverse is the case when interest rates are reduced. It is less profitable to lend but attractive to borrow. Generally, interest rates affect consumer behavior. The purpose of lowering interest rates may be to increase the spending rate of the economy at a time when it has dropped. When individuals and businesses see that the interest rates are cheap, the level at which they borrow is increased.
A struggling economy will benefit from lowered interest rates, but it will lead to inflation. When there are more funds in circulation due to reduced interest, there is a higher spending rate. The demand for goods is increased, and it will suppress supply. Inflation eventually sets in to balance the economy.
Another natural way to restore balance is to increase interest rates. When this is done, there is fewer amounts of funds in circulation. Consumers begin to panic and repay their debts. At this point, there is much to gain when your money is loaned out. Consumers, therefore, save in banks so they can earn interest. However, there will be less demand for goods again which will induce poor growth of the economy.
It may sound surprising, but a Central Bank can adjust interest rates in such a way that you pay to either lend money or save it in a bank. In the unusual scenario a borrower receives interest rather than pay interest. Negative interest rates may be used by Central Banks as one of the tools of last resort, to revive an economy in a very drastic state.
When individuals realize that they need to pay money to save in banks or lend to others, they decide to keep the money themselves during an economic decline. The idea here is that borrowing is incentivized to stimulate further economic activity. While this measure is a very negative approach, many experts believe it is the last resort to help a crumbling economy.
The concept of interest rate is straightforward to understand. The interest rate policy influences the economy of a country as well as individual behavior. Central banks play a key role in setting these rates to ensure an economic balance. High-interest rates may increase the yield of lenders but slow the growth of the economy. In contrast, low interest rates may reduce the yield of lenders but increase the growth of the economy.
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The Philadelphia Sixers, of the National Basketball Association (NBA) in the United States, have selected Crypto.com to become their new jersey patch sponsor in an intriguing new partnership.
The deal will see the hugely popular sports team sell Non-Fungible Tokens (NFTs) that fans can purchase. The sponsor will also appear in other arena promotions at the Wells Fargo Center this season. Crypto.com announced the latest exciting deal through their official blog.
“We are thrilled to launch a long-term partnership with such a progressive team at Crypto.com, a company that shares our drive for greatness,” President of Business Operations, Chris Heck, stated. “Crypto.com will be woven into the fabric of our identity, and together, we will change the landscape for how crypto is integrated in sports.”
The move further signals Crypto.com’s determination to establish itself on the world stage. A step into the premier world basketball league marks a significant milestone for crypto to become mainstream.
This deal is the latest in a long line of partnerships that have seen the crypto giant partner with Formula 1, Paris Saint-Germain, and the National Hockey League’s Montreal Canadiens. The 76ers deal is, however, the very first partnership with the NBA, and more partnerships should follow.
Crypto.com’s partnerships with just sports brands have totaled over $400 million and will likely yield a good deal more money through the huge exposure provided.
Users throughout the crypto space will welcome this news as it could herald a further step toward mass adoption, or at the very least, invite an additional significant number of people.
The global sports industry has already been a hot topic in crypto with exciting projects like Sorare and Chiliz announcing partnerships of their own.
As these deals continue to be signed, there will be a further impetus to educate prospective users about blockchain’s incredible possibilities.
Synapse Protocol has added a new network pool to its mainnet. The Arbitrum network is now live on the cross-chain liquidity protocol, permitting users to easily make cross-chain transfers with a single transaction from the network.
With the addition of Arbitrum pools, the protocol now has support for five different networks, including Binance Smart Chain (BSC), Ethereum, Polygon, and Avalanche pools. The introduction was announced on 21st September via Twitter.
According to the tweet, the Arbitrum pool will bridge faster transfer of assets, starting with ETH transfers back to the Ethereum network.
“We’re introducing support for @Arbitrum today to the Synapse Network, starting with ETH transfers. This is the first ETH fast withdraw bridge back to Ethereum. Move ETH to & from Arbitrum within minutes,” tweeted Synapse.
Users can now visit the Synapse pools page to view the five supported chains and enjoy fast cross-chain withdrawals. With over $15,000,000 in total liquidity, Synapse is the most liquid fast withdrawal bridge from Arbitrum.
Liquidity providers stand to earn fees and $SYN incentives when they supply nETH and Arbitrum ETH. Synapse announced the reward system in a Tweet thread.
“$SYN incentives are live for the @Arbitrum nETH <> ETH pool,” Synapse wrote on Twitter.
According to the tweet thread, users need to utilize the nETH <> Arbitrum ETH pool to get $SYN rewards. In addition, the tweet also disclosed how users would get rewards from providing liquidity on the Arbitrum ETH pool.
“nETH is minted by bridging ETH from mainnet to nETH on Arbitrum using Synapse."
Once you have nETH on Arbitrum, pair it with native Arbitrum ETH to provide liquidity.
As the pool balances change, arbitragers will be incentivized via a deposit bonus to rebalance the pool,” the tweet disclosed.
Synapse is a trustless cross-chain bridge and stableswap that allows users to bridge assets across all chains, swap assets, earn yield, and more. The platform supports Ethereum, BSC, Polygon, Avalanche, and Arbitrum networks and ensures that users easily transfer assets across any supported chains.
Where to find Synapse:
Lending money at no cost is not practical because of the time value of money. Interest rates are necessary costs that help to keep an economy stable.
Credit plays a very significant role in the economy. It helps to ensure that an economy's financial cycle is always in motion. It is also a means through which individuals can raise capital and pay it back later. Businesses also make use of credit for the purchase of goods and services. When the purchased goods are sold, profits are made which are then used to repay the debt. In fact, anybody for various reasons can take a loan and pay it back over time.
For credit to be easily accessible by those who need it, some kind of incentive is usually involved for creditors. Most times, the incentive is in the form of interest which creditors charge borrowers. In this write-up, we will discuss everything you need to know about interest rates.
Interest rate is a commonly used phrase used in the financial world. However, what is interest? Interest is a financial incentive owed by a lender to the borrower. It is the cost incurred by a borrower for borrowing money. For instance, if Jackson decides to lend Jonathan some amount of money, say $5000, they may have an agreement that the refund would be at 5% interest. This means that Jonathan will have to repay the $5000 plus an extra 5% of the borrowed sum. That is, he will pay back $5250 to Jackson.
Having understood what interest means, we can easily deduce what interest rate is. Interest rate is simply the proportion of a loan charged as interest with respect to time. Therefore, if Jackson's interest rate is 5% per year, Jonathan would have to pay the sum of $5250 in the first year.
Interest rates are termed either simple or compound. Using the earlier illustration, simple interest maintains the same rate for subsequent years, that is, 5% interest every year ($5250 yearly). In contrast, compound interest charges interest on the initial principal and accumulated interests from earlier intervals. For example, 5% of the $5250 from the first year gives $262.5. Hence, if the loan is for two years at 5% compound interest, $262.5 will be the interest for the second year rather than $250.
Now, let us explain the critical role interest rates play in an economy. In commercial banks, all transactions revolve around borrowing and lending. Anyone who deposits money is a lender. As banks pay other people, you receive interest because your deposits are, in principle, lent to other people. You also pay interest to the bank each time you borrow money.
Although banks charge and pay interest, they do not have the flexibility to set these rates. Only Central Banks have the right to do so. By increasing or decreasing interest rates, a Central Bank can regulate the economy. If the interest rates are increased, more interest will accrue to you if the bank lends out your money. The downside is the higher cost incurred by those who want to borrow. Therefore, when interest rates are high, it is expensive to borrow but profitable to lend.
The reverse is the case when interest rates are reduced. It is less profitable to lend but attractive to borrow. Generally, interest rates affect consumer behavior. The purpose of lowering interest rates may be to increase the spending rate of the economy at a time when it has dropped. When individuals and businesses see that the interest rates are cheap, the level at which they borrow is increased.
A struggling economy will benefit from lowered interest rates, but it will lead to inflation. When there are more funds in circulation due to reduced interest, there is a higher spending rate. The demand for goods is increased, and it will suppress supply. Inflation eventually sets in to balance the economy.
Another natural way to restore balance is to increase interest rates. When this is done, there is fewer amounts of funds in circulation. Consumers begin to panic and repay their debts. At this point, there is much to gain when your money is loaned out. Consumers, therefore, save in banks so they can earn interest. However, there will be less demand for goods again which will induce poor growth of the economy.
It may sound surprising, but a Central Bank can adjust interest rates in such a way that you pay to either lend money or save it in a bank. In the unusual scenario a borrower receives interest rather than pay interest. Negative interest rates may be used by Central Banks as one of the tools of last resort, to revive an economy in a very drastic state.
When individuals realize that they need to pay money to save in banks or lend to others, they decide to keep the money themselves during an economic decline. The idea here is that borrowing is incentivized to stimulate further economic activity. While this measure is a very negative approach, many experts believe it is the last resort to help a crumbling economy.
The concept of interest rate is straightforward to understand. The interest rate policy influences the economy of a country as well as individual behavior. Central banks play a key role in setting these rates to ensure an economic balance. High-interest rates may increase the yield of lenders but slow the growth of the economy. In contrast, low interest rates may reduce the yield of lenders but increase the growth of the economy.
