Cryptocurrency

How To Lend Cryptocurrency

By David Krug David Krug is the CEO & President of Bankovia. He's a lifelong expat who has lived in the Philippines, Mexico, Thailand, and Colombia. When he's not reading about cryptocurrencies, he's researching the latest personal finance software. 8 minute read

More and more people are turning to cryptocurrencies as they lose faith in more established forms of finance. Some people may feel more secure and in charge of their financial futures when storing their money in the user-driven, more transparent realm of digital assets. This has led to a rise in the popularity of online lending communities.

To borrow or lend cryptocurrency, users can do so through these sites. They function similarly to conventional lending services, but they are based on interpersonal relationships between users, which some may find more trustworthy. As 2021 is expected to be a record year for digital currencies like Bitcoin, this presents a golden opportunity for lenders to benefit handsomely.

Top Crypto Lending Sites

The market for crypto lending platforms is flooded with options, but not all of them are made equal. Among the many factors to think about while making your decision is how safe it is. 

Users of third-party crypto platforms risk having their data stolen or compromised since they must put their trust in the platform’s security. Multi-factor authentication (MFA) and encryption are two examples of security features that users should seek out.

Rates of interest are also a major consideration. Lenders benefit from higher rates, whereas borrowers prefer lower rates to reduce their monthly outlays.

The finest cryptocurrency lending systems are also adaptable. A platform’s usability improves when it supports additional currencies beyond bitcoin (BTC) and ether (ETH), as well as a range of loan amounts and financial services.

There are a number of important monetary elements to look for in a loan platform, including cheap fees, flexible loan lengths, and the absence of deposit limits (which limit the amount that lenders can deposit at once).

Here are a few of the top cryptocurrency loan platforms to consider:

1. SALT Lending

Perfect for Cryptocurrency Addicts with Credit Cards (And Borrowers in General) SALT Lending is a cryptocurrency loan provider that provides loans for both individuals and businesses. 

The purpose of this platform is not to help HODLers maximize the return on their cryptocurrency holdings; rather, it aims to assist HODLers in making long-term investments in themselves and their businesses without having to liquidate their holdings.

To give you the lowdown on SALT loans, here’s what you need to know:

  • Principal balances (loan amounts) start at $1,000
  • APRs start below 1% but are subject to change with market conditions
  • LTVs range from 20% to 70%, depending on the coins backing the loan and other factors
  • Terms range from 12 to 60 months
  • No origination or prepayment fees
  • No impact on your credit score
  • No borrowing against future income (which helps control risk)

SALT also stands out since it offers a cryptocurrency credit card. SALT’s cryptocurrency card, currently available only through a waiting list, provides a revolving credit line equal to the value of your collateral cryptocurrency, allowing you to increase your purchasing power proportionally with the value of your assets.

2. BlockFi

Superior in Every Way, for Lenders as well as Borrowers

  • Tokens Supported. All major tokens
  • Platform Fees. Administration and monthly withdrawal fees
  • Other Perks. No deposit limits, flexible withdrawals, easy setup

BlockFi is one of the largest and most well-known cryptocurrency lending services, managing over $10 billion in crypto assets. It accepts a number of different currencies, has no deposit cap, and is one of the few services to give compound interest. 

These are just a few of the many enticing advantages it offers:

  • Superior Safety. BlockFi supports multi-factor authentication, and the signup process includes KYC (Know Your Customer).
  • Addition of Interest. Lenders have the option of charging compound interest, which increases their earnings potential.
  • Reduced Costs of Management. The administration fees for BlockFi start at only 1%. No fees are charged for making withdrawals, and there are no penalties for withdrawing money early.
  • Cost-Free Buying and Selling. The platform does not charge any fees for users to exchange between different cryptocurrencies.

BlockFi has a high withdrawal charge, which is its one and only major drawback. However, users only pay it once a month rather than each time they make a withdrawal, which can be significant savings.

3. Nexo

Most Suitable for Users Who Care About Privacy

  • Tokens supported. All major tokens and several other cryptocurrencies
  • Platform fees. None
  • Other perks. No deposit limits, competitive interest rates

Nexo offers over 20 currencies in 200 different countries, however, some platforms only deal with a handful. Borrowers can get started with a $50 crypto loan on the site, increasing its usability. Nexo’s security features, however, are where it truly shines. 

Functions include:

  • A Place to Put Cold Things. Nexo’s money is offline in cold storage, making them unhackable.
  • Insurance. In the event of a hack, users’ accounts on the network are protected by $375 million in insurance.
  • Benefits are dispersed each day. Funds can be withdrawn daily if the lender so chooses, providing greater convenience.
  • The ability to use many fiat currencies is provided. Nexo’s compatibility with multiple fiat currencies broadens access to loans around the globe.

Thanks to these safeguards and customization options, the platform can compete with the best crypto loan businesses. It’s a great option all around, however, lenders will benefit more than borrowers.

4. Binance

Excellent For Trading Between Several Cryptos

  • Tokens Supported. All major tokens plus more than 100 smaller currencies
  • Platform Fees. Spot trading, withdrawal, and deposit fees based on currency
  • Other Perks. Regular coin value updates, easy-to-use interface

Even crypto newcomers may have heard of Binance, as it is the largest cryptocurrency exchange in the world. It also has a sizable loan service, one that accepts a wider variety of cryptocurrencies than its competitors, including some quite obscure ones. 

There are no minimum deposits required, and you can also enjoy perks like these:

  • There are two basic kinds of loans. Users have more options, as they can select between fixed and flexible deposits.
  • Modifiable Interest Rates. To ensure that both parties receive a reasonable interest rate, the value of a currency is updated periodically.
  • Advances in a flash Since Binance doesn’t require any additional authentication from its users, those with an account can immediately begin lending and borrowing.
  • Maximum ease of use. The Binance exchange can be used on any device running any version of Windows, macOS, iOS, or Android.

The only real limitation of Binance is that it does not handle fiat money despite accepting all of the main cryptocurrencies. The withdrawal timeframe is restricted, whereas many alternatives do not impose such constraints.

5. CoinLoan

Consumers will benefit most from trying to find honesty and openness

  • Tokens Supported. All major tokens and a few smaller currencies
  • Platform Fees. None
  • Other Perks. Unlimited withdrawals, quick verification

If you’re looking for a loan platform with experience, go no further than CoinLoan. Aside from being free to use, the service also has a straightforward UI. 

Additional features include:

  • Rates are compared. When customers see how their prices stack up against those of competitors, they tend to become loyal.
  • Strong Protection. With multi-factor authentication, insurance, cold storage, and CCSS compliance, CoinLoan clearly takes security seriously.
  • Loan Terms That Are Easy to Work With. Loan duration, interest rate, and repayment terms are all negotiated between the lending institution and the borrower.
  • Accessibility. CoinLoan is one of the more approachable crypto loan platforms thanks to its mobile app, speedy enrollment process, and user-friendly layout.

CoinLoan’s use is constrained by factors such as the app’s $100 minimum deposit requirement and the app’s small user base. That being said, it more than makes up for it in other respects.

6. CoinRabbit

Most Comprehensive Cryptocurrency Collection

  • Tokens Supported. 64 different cryptocurrencies
  • Platform Fees. Crypto loan fees from 12% to 16% APR
  • Other Perks. No KYC or credit check needed, instant approval, unlimited loan term length

CoinRabbit is a relatively new cryptocurrency lending platform that supports a diverse array of cryptocurrencies for collateral and interest payments. 

CoinRabbit is an alternative lending company that offers more cryptocurrencies than most other platforms and has a loan approval time of minutes. The user can earn up to 10% annual interest on their stablecoin deposits.

Here are a few of CoinRabbit’s finest qualities:

  • Picking a Cryptosystem. In addition to Bitcoin, the platform supports more than 60 other cryptocurrencies that borrowers can use as collateral for loans.
  • Interest rates on savings accounts are currently at a historic high. CoinRabbit provides a fixed annual percentage yield (APY) of 10% on deposited stablecoins, which is on par with or more than the APY offered by several alternative platforms.
  • Length of Loan Is Uncapped. CoinRabbit allows borrowers to extend their loans indefinitely so long as they continue to make their regular monthly payments, which is an advantage over other cryptocurrency lending platforms with fixed loan term durations.
  • Money is Transferred Instantly. The loan application process is straightforward, and after the terms are agreed upon and collateral is paid, the borrowed money is sent directly to the borrower’s preferred cryptocurrency wallet.

The high-interest rate on crypto loans offered by CoinRabbit (12%-16% APR) is a drawback. These costs can pile up, but saving more money in accounts that earn 10% can mitigate some of that impact.

7. Aave

In terms of decentralized lending, this is the best option.

  • Tokens Supported. Ethereum-based tokens
  • Platform Fees. Variable fees, depending on transaction complexity
  • Other Perks. No intermediary

Aave stands out from the pack since it is a decentralized network, unlike the others above. Direct P2P lending is made possible without the platform having to act as a go-between because of the usage of code-based smart contracts. 

By using the blockchain to verify transactions, smart contracts improve the lending process by increasing the level of control, transparency, and security it provides. One more perk is…

  • Libre Source Code. Because it is open-source, the platform allows users to make their own apps and contributes to better community security.
  • Reduced Restriction. There are no minimum deposits required and no lock-in periods during which an investor cannot liquidate their holdings on Aave.
  • Transparency. Peer-to-peer lending eliminates many trust difficulties, with third-party security assessments being publicly available and requiring no intermediary.
  • Government by the People. The Aave community has more say over how the platform is run because it is user-driven.

Aave’s reliance on smart contracts means that it accepts only cryptocurrencies built on the Ethereum platform and that its fees are not always cheap. Although it does have some drawbacks, Aave is still a great choice for decentralized crypto lending.

8. Cake DeFi

When it comes to potential returns, Liquidity Mining has the highest ceiling, at up to 33%. Another decentralized option for daily cryptocurrency rewards is Cake DeFi. However, if you are prepared to make the most of what Cake DeFi has to offer, you can get the highest possible return on investment.

To be more specific, those who use Cake DeFi can gain:

  • Low price volatility and assured returns within four weeks with lending batches on cryptocurrencies yield interest rates of up to 6.5%; with periodic bonuses, that rate can go even higher.
  • As much as 33% on mining for lucre (yield farming)
  • Joining a transparent masternode pool can increase your staking returns by up to 27% without requiring you to learn how to run a masternode.

Cake DeFi is compatible with a wide variety of cryptocurrencies.

  • BTC
  • ETH
  • DFI
  • LTC
  • USDC

Bottom Line

Coinbase is one notable company that is not included here. However, after receiving pushback from the SEC, Coinbase decided to abandon its plans to launch a lending service (SEC).

There is an abundance of cryptocurrency loan platforms to satisfy all needs. There is a service for any user need, whether they prioritize anonymity, privacy, returns, interest rates, or liquidity.

These choices are only a sample of what’s out there, but they’re some of the best. To keep their crypto assets safe, individuals should first select a dependable crypto lending platform from the options provided above. They will then be able to try out crypto without worrying about their data being compromised.

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