When it comes to cryptocurrency lending, tons of factors equate to a good earning profile. Also, the borrowing part of the lending ecosystem is almost always missed out on. Therefore the article covers concepts of lending, borrowing, and process steps for the 10 best crypto lending platforms.
What is Cryptocurrency Lending?
The method of lending crypto assets or fiat currency to the person who wants to borrow it at an agreed-upon interest rate constitutes crypto lending. Therefore, it has the same execution as that of investments and loans in a traditional banking system.
- Lenders: They are usually someone who has an accumulation of cryptocurrency and is looking for a way to earn passive income.
- Borrowers: They are usually someone who requires a loan against their crypto asset. Getting a loan helps them to retain their asset without selling them.
- Lending Platform: The platform which allows users to lend or borrow crypto assets.
Where to Lend your digital assets?
- Centralized Finance (CeFi) Platforms
The platform which acts as a middleman in the execution of the lending process comes under this. It means that the lenders and borrowers give up their respective asset and collateral to this platform until the time borrowed amount is settled in full.
Both parties will not have control over their assets. Moreover, a KYC process is standard on these platforms, meaning that anonymity is not possible.
- Decentralized Finance (DeFi) Platforms
These platforms have code-based contracts known as Smart Contracts to execute lending. The contract executes when the specified demands are fulfilled, and this process is automated. Thus, one does not need to undergo the KYC process, and since it works on a set of rules, it is pretty transparent.
BlockFi
BlockFi, founded in 2017, is a credit service-based crypto platform that supports trading, earning interest, and borrowing. To learn more, read the BlockFi review.
Binance
Binance is one of the largest crypto exchange platforms globally. To learn more, read Binance Review.
- Binance Earn is the product for the investment of crypto assets and providing multiple services to earn a passive income.
- Crypto Loans is the product where you can borrow loans for trading or staking.
HODLNAUT
Hodlnaut is a fairly new company in the cryptocurrency market, with its lending and borrowing platform being launched in April 2019. It has only been growing ever since. To learn more, read Hodlnaut review.
HODLNAUT Lending
Highlights: It has good customer support with a rating of 4.4 and easy withdrawals.Note:
- It doesn’t support fiat currencies at all, hence no provision for buy/ sell.
- Users can download the app for iOS devices.
- For an individual, it is an excellent platform to HODL the cryptocurrency rather than borrow.
YouHodler
Youhodler is a FinTech platform that provides crypto lending and exchange services. To learn more, read the YouHodler review.
Note: YouHodler has a service charge for many of its services.
Kucoin Lending
Kucoin is a global cryptocurrency exchange established in 2017. Kucoin Lending provides an easy-to-use platform for lending and borrowing crypto assets and invites new investors to lend their assets in a low-risk environment. To learn more, read Kucoin Review.
Kucoin Borrowing Process
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Note:
- If there is a failure in auto-renewal, the system will start to partially liquidate the coin of the highest value estimated in BTC until it repays off the debt.
- When a borrower’s debt crosses the 100% mark, all withdrawal and trading activities of that account are suspended.
Crypto.com
Crypto.com is a crypto application that provides products savvy to the field of cryptocurrency. You can buy/ sell or earn/ borrow, opt for a wallet facility, and trade in the native exchange. To learn more, read Crypto.com Review.
Crypto.com Credit Process
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Note:
- Crypto.com also provides Crypto.com lending, which is different from crypto credit as lending is supported on the exchange while credit is supported on the mobile app.
- More or less, the dynamics are the same except for multiple loans supported on Crypto Lending and the provision of taking out crypto loans in BTC.
Nexo
Nexo is a cryptocurrency platform that provides instant crypto loans. It is centralized and aims to remove inefficiencies wrt to lending in the crypto world. In addition, it extends its lending to 40+ Fiat currencies across 200 jurisdictions. To learn more, read Nexo Card Review.
AAVE
Aave is an open-source market protocol for lending and borrowing which is decentralized and non-custodial.
The protocol operates as a set of multiple smart contracts in place, having the following entities in general.
- Lenders: Provide liquidity to the pool by depositing crypto assets.
- Borrowers: Borrow the funds from the pool and pay the interest incurred.
- Interest Rate: Decided algorithmically, the lesser the funds in the pool, the higher the interest rate for the borrower.
- Reserve: Takes the deposited crypto assets and stores them as an Ethereum equivalent as total liquidity. This is a preventive measure so that the lender can always withdraw assets at any time.
The loans are not matched per lender or borrower; rather, it depends on the funds available in the pool.
Moreover, since smart contracts are coded contracts, anyone can buy the collateralized asset in case of failure of repayment at a discounted price.
CoinRabbit
CoinRabbit is an instant lending and borrowing platform with hassle-free steps. Further, it is a centralized platform and lets users take loans for an unlimited period. It has several advantages, including:
- low minimum loan amounts
- No boundaries on the maximum loan amount
- No monthly payments
- Instant lending service without any credit checks
Best Crypto Lending Platforms: Conclusion
There is a huge growth in options available for cryptocurrency services. The term Do Your Own Research (DYOR) stands true when opting out for a particular platform or service. Therefore, it is necessary to understand all ways you can earn passive income on your assets. Hence, you can go with Celcius or BlockFi, if you’re looking for high-interest rates and security.
Moreover, if you don’t want to withdraw your funds out of your trading account, then Binance or KuCoin can be your go-to platforms. In addition, if you wanna do a complete deep dive in DeFi, the head for all the vast features of AAVE.
Frequently Asked Questions
What is the crypto lending price?
Crypto Lending price is associated with many fees such as origination, network, transaction, etc. Keep in mind that the platform may not charge for the service, but withdrawing/depositing fees is still applicable.
Is KYC required for all lending platforms?
No, KYC is not required for decentralized platforms.
