Crypto lending is a form of Decentralized Finance that allows investors to lend out their cryptocurrencies to various borrowers. In return, these investors receive interest payments known as “crypto dividends”. It will not be entirely out of place to compare crypto lending accounts to the regular savings accounts that are very common among us today and offered by banks. Just as banks make use of traditional money, crypto lending accounts deal with cryptocurrencies.
There are a good number of platforms that focus on lending crypto to customers willing to pay back at an agreed time. Alongside Cryptos, these investors also accept stablecoins, which are tokens that have their price fixed at $1.
Over the years, we have experienced a lot of Bitcoin deposits, even though other investors prefer using stablecoins. Others also use more volatile and not-so-popular cryptocurrencies. These cryptocurrency accounts usually pay interest in the same currencies that are deposited. While some also experience daily changes in their rates, others provide a pegged rate, ensuring that the money will be locked for a specific period. In Crypto lending, borrowers also have the opportunity to stake their crypto as assurances of security or loan repayment. As a result, the investors have the ability to trade (in this case, sell) the crypto assets if the borrower fails to pay off the loan, which means any losses are recovered.
1. BlockFi
BlockFi is a platform that deals in crypto trading. It also deals in other services like interest accounts, credit cards, financial products, and loans.
This platform is a cryptocurrency wallet and exchange, boasting more than 1 million people and businesses worldwide as users of the platform. These users trade and store crypto. On BlockFi, you are taught the basics of cryptocurrency trading, which earn you a high-interest rate from your deposits.
Some of the best features of BlockFi include convenient trading, the ability to borrow against your crypto, and the crypto rewards credit card. You can get started on BlockFi here.
Pros
- Instant cryptocurrency trading without any monthly or commission fees
- On cryptocurrency holdings, you have the opportunity to earn enviable interest rates
- No balance caps and minimum balance requirements
Cons
- Does not accommodate the joint account option
- Monthly limits to interest account withdrawals, depending on the cryptocurrency type
- Loan interest rates and interest account APY have a high potential to witness weekly changes
2. Nexo
This platform is basically a crypto wallet that also provides other services. Some of its various other attributes include a card and crypto lending given as instant crypto credit lines. Used by more than 40 million merchants across the world, the Nexo card is obviously a big digital asset that has come to stay.
For interested borrowers, Nexo crypto loans are secured by cryptocurrencies in the form of collateral. Borrowers can refresh or recharge on Bitcoin while using some to secure a credit line that does not need credit checks, does not need monthly repayments, and is accessible for prices between $50 and $2 million. You can get started on Nexo here.
Pros
- More fiat currencies can be borrowed (45 or more) than their competitors
- Massive insurance coverage (as high as $100 million)
Cons
- Interest rates begin at 8%, although some competitors’ charges are not as high as this
3. Celsius
The Celsius Network (CEL) is a peer2peer platform for decentralized finance (DeFi) that gives room for users to lend and borrow. Users of the Celsius Network can also trade a wide range of cryptocurrencies.
This Network supports conventional digital tokens like ETH and BTC. Generally, this platform is a custodial manager of assets involving decentralized finance opportunities and offers controlled access to yield and loans. It removes a fee for the service provided without users’ exposure to the threat and dangers of self-protected crypto. You can get started on Celsius here.
Pros
- Compatible for trading on Android, iOS, and desktop devices
- Brilliant DeFi services
- As a funds transfer system, the CelPay has proven to be very easy to use
- There is no fee for loan origination, transfers, or minimum balances
Cons
- S. residents neither have access to the CEL token nor its benefits
- The control is too centralized
- Only a few of its tokens and coins can be purchased
4. Binance US
Binance US is an American partner of the widely known Binance. The Binance platform halted its acceptance of U.S. users in 2019. Binance has since declared its partnership with US-based outfit, Binance.US.
As of today, US investors are still unable to use the original Binance. However, Binance US provides investors with more than 80 cryptocurrencies to select from. The platform is user-friendly, especially for beginners. A major advantage of Binance.US is that it offers low fees, which is in contrast to some exchanges. You can get started on Binance US here.
Pros
- If you use the Binance Coin (BNB) to pay fees, you get 25% off your trading fee
- There is the availability of several educational resources
- The platform has a tax statement portal to aid the preparation of crypto taxes
- Identity verification procedure
Cons
- Customer service options are limited
- Platform had a history of regulatory scrutiny
- Limited to some states
5. Uphold
Uphold is a financial service platform that allows people to safely move, hold, convert and transact in different assets. Although the cloud-based platform is often connected with Bitcoin and some other cryptocurrencies, Uphold can also function as a tool for trading traditional assets like gold and fiat currencies.
The creators of this remarkable financial service avenue said its priorities are the maintenance of high levels of transparency and massive depletion of transaction fees. You can get started on Uphold here.
Pros
- The fee structure on Uphold is a transparent one; this will prevent users from being caught unawares by unforeseen costs
- Investors can trade on various asset classes. Precious metals, U.S equities, and cryptocurrency can be purchased on Uphold
Cons
- Uphold does not have advanced trading attributes targeted at active or professional traders as some exchanges do
- The Uphold platform offers almost 100 cryptocurrencies with which users can buy and trade, but this is small compared to other reputable exchanges that provide more
3 Benefits To Getting A Crypto Lending
The popularity of cryptocurrency continues to grow as the days go by, especially as more people are getting to know more about it and embrace its relevance to the advancement of technology in the world.
In November 2021, financial reports indicated that the whole cryptocurrency’s market capitalization had exceeded $3 trillion. It was also revealed that close to 40 million people in the US have started venturing into digital currencies. Generally, there are juicy benefits that accompany getting a crypto loan. Here are some of them:
- No credit check: Exchanges that lend crypto do not usually conduct checks after a potential borrower’s application. This undoubtedly makes this financing alternative an attractive one, especially for people with no credit history or those with a poor one.
- Loan amount is determined by asset value: Most times, a borrower can get a loan of up to 50 percent of his portfolio value. Meanwhile, some exchanges can loan as much as 90 percent of such value.
- Choice of loan currency: platforms vary from one another with different terms and conditions, but you get to choose what you need most of the time. Generally, loans can be gotten as specific cryptocurrencies or U.S. dollars, depending on your choice. Read on to see some of the best crypto lending platforms.
Final Thoughts
Although some of the benefits of getting a crypto loan have already been discussed, another benefit of getting it is that these platforms offer low-interest rates and provide fast funding. Holistically, crypto loans may not be as cheap as car or mortgage loans, but they provide an alternative to credit cards and personal loans. Some crypto loans are gotten with an interest loan of less than 10%.
Also, for most of these platforms, loan funds will be delivered to you in a few hours as soon as your loan is approved following your application. To borrow crypto loans, you should have a significantly high tolerance for volatility and risk. Generally, taking crypto loans is not a bad idea but ensure you channel it into proper investments. Do not default on an agreed repayment date. The platforms listed above are some of the best places to obtain crypto lending.
The investment itself is a risk, and it is advisable not to put in money you cannot afford to lose. The crypto market is volatile and should not be rushed into. Whatever platform you choose to obtain a crypto loan from, ensure you have a good knowledge and understanding of such platform, their services, and how everything works there.
