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Did you know that crypto lending platforms operating in the cryptocurrency space is one of the fastest-growing areas. And it is easy to see why.
- Do you want to earn interest rates up to 15%?
- Do you want to lower the interest rates on your current loans?
Imagine a lender and a borrower both agreeing on the terms for their loan, such as repayment plan, interest rates, collateral, etc all made possible and removing the power and wealth held by all unnecessary middlemen.
This is the power of blockchain and the power of decentralised lending. Decentralied finance, or DeFi is one of the fastest-growing areas, and where most of the attention for blockchain projects currently lies.
A big reason for incentivising people to join the cryptocurrency and Bitcoin lending club is the opportunity to save on high-interest rates as a borrower and as a lender earn a much greater chunk from interest rates than your normal savings account.
Did you know that you could earn interest ranging from 5% to 15%+ from lending out your cryptocurrencies?
So if you are wondering about how cryptocurrency lending works. And which are the top-rated crypto lending platforms to use in 2020 then you are at the right place!
If you are just starting out with crypto then you can learn more how it all works and best tips here
How does a crypto loan work?
Before I dive into the top list of lending platforms I wanted to briefly explain how cryptocurrency loans work.
Ok so a cryptocurrency loan in its essence is easy enough to understand. On the one hand you have a lender and the other a borrower. And then in the middle you either have a centralised or decentralised platform facilitating the loan.
With a crypto loan, the borrower puts down cryptocurrencies like Bitcoin collateral to get fiat or stablecoin loan. Or they put down fiat money in collateral to get cryptocurrencies like BTC or ETH.
And cryptocurrency loans can be interesting as it is like p2p loans opening up a whole new market of lenders to loan-hungry borrowers.
8 of the best crypto lending platforms to use in 2020 + Bonus item
1 ) BlockFi
BlockFi looks like any other fintech company providing lending and interest accounts, but they do operate in the cryptocurrency space.
BlockFi is not another blockchain company, that had its own ICO bringing in millions. But raising funds hasn’t been an issue for this new popular crypto-fintech company.
With $52.5 million received from Mike Novogratz’s Galaxy Capital in 2018. And previously also attracted VC-funding from ConsenSys Ventures, PJC, Fidelity and Morgan Creek Digital (interview with Brad Michelson from BlockFi).
What BlockFi offers is lending, so if you want to borrow money for a car, house, trip, etc you can do so at their platform with crypto being the main asset (you can choose to withdraw USD instead of crypto as a lender).
And they do provide crypto holders with an opportunity to earn some extra cash from their cryptocurrencies that otherwise would just sit there. Up to 8.7% APY on your crypto is not a bad deal at all.
2 ) Bankera
Bankera is another very interesting crypto lender.
So if you are looking to take a loan out you should check out Bankera. They are offering interest rates down to 6.95%, and up to 12.95% depending on the size of your loan.
And you can use Bitcoin, Ether, DASH or many other cryptocurrencies as collateral and downpayment. Bankera offers LTV up to 75%.
Bankera is something for the small-time borrower looking for some quick extra funding, starting at €25. Going up to $1M for the bigger loans.
3 ) Nexo
Nexo is another very popular crypto lender, and one of the biggest in the space.
They provide lending (crypto credit lines) for both businesses and private people, and of course also the interest (rate) part for crypto holders that are looking for ways to earn some extra money.
They also have their own Nexo card. Which you can use at shops all around the world. This works like any other debit card. But it can also be tied to your crypto credit line.
Everything is done easily from one simple app, where you can start earning interest rates up to 8% on both Fiat currencies and your cryptocurrencies.
With Nexo’s Custodial assets covered by a $100M insurance policy provided by BitGo and Lloyd’s of London and the 10+ years of Fintech experience, you can sleep more comfortably knowing that these guys know what they are doing.
4 ) Salt
Salt is another popular crypto lending platform. Salt started out with its own ICO back in 2017, taking in $50M in capital to support its growing lending business.
And today they are definitely one of the most popular crypto lenders around.
Salt offers its lending products in a very nice-looking app and design, perfectly tailored for the online generation. To take out a loan with Salt you can deposit many of the most popular cryptocurrencies as collateral.
Salt has interest rates from 5.95% and a starting LTV from 30% – 70%.
5 ) YouHolder
YouHolder is another interesting crypto loan company.
Here you can start borrowing funds with LTV up to 90%. And for the crypto holders that are looking to earn some extra income from their crypto holding they can earn interest rates up to 12% APR.
YouHolder has one of the widest available selection of cryptocurrencies supported on their lending platform. With Bitcoin, Ether, USDT, USDC, PAXOS and a big pool of altcoins. These can be used for collateral, repayments or for your loans.
With interest rates up to 12% I definitely think you should look into YouHolder, why not earn some extra money if your crypto is just sitting there otherwise?
6 ) Unchained Capital
This is a crypto lender that sticks out from the crowd with its multisig security layer, where you the user (borrower / lender) can use Unchained Capital directly from your own secure cryptocurrency wallet.
Hardware wallets like Ledger and Trezor works perfectly to use in combination.
Otherwise Unchained Capital works like the others on this list. They provide crypto loans (Bitcoin).
With interest rates from 9.00% for 3-month loans. To 14.00% for a three-year loan. And LTV ranging from 35-50%.
7 ) CoinLoan
CoinLoan is another cryptocurency backed loan platform.
CoinLoan is tailoring for both the borrowers seeking funding and for the holders that want to increase their portfolios by providing the lending funds.
For the latter category, you can earn interest rates up to 10.5% by lending out your cryptocurrencies to others using CoinLoan.
A great way and good rate to earn some extra money by not doing much.
And for the borrowers, they can get access to those funds by signing up for CoinLoan. Getting 60% LTV and interest rates ranging from 5-10%.
8 ) Celsius Network
Celsius Network is another blockchain-based crypto lending platform. Focusing on both giving holders a chance to earn some extra money from their coins and tokens.
And of course providing crypto-backed loans for the borrowers seeking funding. Celsius has LTV ranging from 25% to 50% depending on the size and time plan for your loans.
And interest rates ranging from 3.46% to about 6.30% if you pay with CEL tokens. Which will give you a discount.
Otherwise, you can also use Fiat currency (USD, etc) on their platform and then those rates go up to about 4.95% and 8.95%.
So a fairly good discount that encourage the users of Celsius to invest in the CEL token.
Bonus – Binance (margin funding)
Now Binance might be a well-known name for you if you’ve been around in the crypto space for some time now. They burst onto the scene back in 2017 and has since seen a rocket-like rise to become one of the biggest cryptocurrency exchanges in the world.
And they are actually now also a crypto lending platform, but we are including them on this list for their great savings rates. Because the actual lending is not for typical loans but going out to fund the margin traders that operate on Binance.
This might come as a surprise to some of you, but if you have followed Binance closely during then lending is just another branch of this growing crypto-tree.
They are already providing many other features that are sure to cement Binance as not only a leading cryptocurrency company but an integral financial institution.
Other products and features of Binance are: staking, their own Binance Chain Coin (BNB), their own stablecoin (BUSD), Binance Launchpad for IEOs are just a few of the highlights showing how Binance’s path to dominance.
And for the lending part Binance will offer two main types of savings products:
- Fixed deposits
- Flexible deposits
These operate like normal savings accounts. Where flexible lets you withdraw your cryptocurrencies at any time for a lower interest rate.
And the fixed will get you a higher rate but then you will need to lock down your cryptocurrencies for a longer time. Anywhere from 3 months to 1 year.
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Conclusion
I hope that this guide to crypto lending, how it works and some of the best platforms to use was helpful.
You might be wondering if there are any crypto lending risks? And obviously this is a very important question. I’ve tried BlockFi out myself and I’ve found the whole experience very good.
What makes it all safer is the collateral part of the loan taker. But there are certain risks, as the gap risk.
This is when an asset would rise in value and drop in value fast, and these lending platforms would re-buy it from the loan taker when the asset reaches the collateral value.
Lets say there is a loan for $5000 and the loan taker puts down collateral for $10,000.
And if this asset would reach $10,000 then the lending platform would re-buy the asset and pay back the loan taker as the collateral been reached. And then if this asset would again drop in value when the purchase is ongoing then it means that the lending platform is exposed to lost value.
And these risks if happened to often and in close time could potentially be thread to the longevity of the platforms financial state.
If there is anything else about crypto-backed loans, or savings that you want to ask us about then leave a comment and we will get back to you.
Otherwise I think you should definitely look into these crypto loan platforms. If you are interested in borrowing funds then they can help you save on interest rates.
And if you are looking to earn some extra money then some of these interest rates for earning are great.
I mean up to 10/15% is very good and appealing.
Find other guides
- Best way to invest in crypto
- Bitcoin investing guide
- How to short Bitcoin guide
- Leading BTC OTC brokers
- Best ADA wallets to use
- Best Stellar wallets to use
Written by:
Per Englund – Founder of Go CryptoWise a cryptocurrency and tech fan that want to see better and smarter products and services that make our lives better and easier
Source: https://gocryptowise.com/blog/best-crypto-lending-platforms/
