building the MetaFi ecosystem to bridge the gap between CeFi and DeFi
building the MetaFi ecosystem to bridge the gap between CeFi and DeFi
04 May 2020, 19:05
2 min reading
Do you need cash but don’t want to cash out your cryptocurrency? Are you looking for an additional passive income stream? Two words: crypto lending. In this article, we’ll go over the world’s top 10 cryptocurrency lending platforms.
With these platforms, you will be able to access cash without having to withdraw your Bitcoin, and earn an attractive interest rate for lending money to other investors.
Just like any type of investment, putting your hard-earned money in cryptocurrencies shouldn’t be a decision taken lightly. The wild nature of the crypto market can play both ways, multiplying your initial investment in months or trapping you in big losses for years. That said, time is a vital factor your investment approach.
Following the 2018 market crash, plenty of crypto investors found themselves in a dilemma: cashing out their assets and assuming a big loss, or hodling until prices would rise again. Crypto lending platforms emerged from that dilemma, giving investors an alternative to use their cryptocurrency assets as collateral for a loan.
Cryptocurrency lending refers to the process of loaning fiat money or a stable digital asset for a fixed period of time and an interest rate. The lending process typically involves two or three parties: a borrower, a lender, and a platform that connects both sides of the transaction. However, there are certain platforms that act as a lender themselves.
Investors approach these platforms to borrow money using their assets as collateral. Depending on the platform, a lender can set specific parameters for borrowers to consider such as the duration of the loan, the interest rate and the minimum amount required.
While each platform on the market has a slightly different lending process, obtaining a crypto-backed loan will generally involve the following five steps:
The crypto loan business is definitely an attractive alternative for many people. However, we strongly advice you to look at both side of the picture before taking a decision.
|Fast approval||Less protections|
|Low transaction fees||Market volatility|
|No credit score check||Collateral requirements|
Nexo offers world’s first instant crypto-backed loans. At least, that’s what they say… Initially, this fintech company intended to cover a wide range of crypto-related services, including cryptocurrency cards. But most of their focus has been on developing the lending platform, which lets you access loans from $1000 to $2,000,000.
Nexo relies on Onfido when it comes to regulatory compliance. So far, this project has provided $1 billion worth instant crypto-backed loans worldwide, making it one of the most popular platforms. As far as interest rates concerns, Nexo currently has some of the lowest rates available starting at 5.9% APR. Borrowers can use the funds with the Nexo Card (depending on their location) or withdraw to a bank account.
Another popular name that has been evolving the crypto-based loan landscape is Bankera. It is a global lender that’s particularly good for those in need of small loans since their minimum amount is only $25. The high loan-to-value ratio of 75% is another reason why you might incline towards Bankera.
This platform has no hidden fees that can hamper your experience. The APR starts from 6.95% although it typically goes up to 10%. Borrowers who wish to avail loans can withdraw in euros, as well as other popular cryptocurrencies.
A blockchain-based loan platform that welcomes all the traders to lend or borrow in the crypto landscape. One of the major takeaways of SALT Lending is that you will get the cash deposited directly on your account.
To date, the company has issued over $50 million in crypto loans, and services are fully available in 30 jurisdictions. SALT was among the first platforms to offer lending service and it is undoubtedly among the most popular ones.
Founded in 2017, Lendroid was developed to address the need for reliable credit in the blockchain space. The platform focuses mainly on the margin trading market of digital currency. Nowadays, not many crypto exchange platforms offer margin trading options, which allow traders to amplify their exposure with a credit line.
The few platforms that do allow margin trading offer credit lines under fixed conditions, leaving traders with two choices: take it or leave it. Lendroid is the alternative to that scenario. This decentralized peer-to-peer platform allows traders to access a pool of lenders willing to provide credit lines for competitive fees in exchange for collateral.
An ideal platform for availing digital asset-backed loans, ETHLend uses LEND token as a medium of exchange where the fees can be as lower as zero. The public Ethereum blockchain stores all the digital assets of loan collateral to avail high network security.
As the transactions are all available on the public Ethereum blockchain ledge, the transparency is at its best and auditable by the public. At ETHLend you can only keep ETH as crypto collateral. So, it is one of the effective crypto lending platforms that is exclusively dedicated to ETH lending and borrowing. Over the years, ETHLend has been able to carve out a credible position in the market as a promising lender.
A UK-based crypto lending platform, Celsius Network was launched back in 2017 as a crypto wallet and mobile application. Celsius Network offers a variety of Crypto backed loans and facilitates borrowing of stablecoins and fiat money against the collateral of digital assets on specific terms.
Another significant benefit of lending and borrowing in Celsius Network is that the holder can earn 10% APR on 25 different crypto assets including Bitcoin, Ethereum, Ripple, Dash, Litecoin, etc.
Celsius will also help in price matching for any cash loan offer. The interest rates of Celsius Network starts from 3.7% and offers a relatively low loan-to-value ratio that falls between the range of 25-50%.
A promising crypto lending platform that has managed to bag a prominent place in this market. landscape. Focusing more on the twin areas of lending and investment, BlockFi is popular for its competitive rates given to borrowers and lenders alike.
As of this writing, users can earn as much as 8.6 percent per year by depositing their assets on BlockFi. The platform is specially providing competitive rates for Ethereum and Bitcoin.
BlockFi is certainly filled with some features that give it a superior edge among the competitors and allow it to emerge as one of the strongest crypto lending platforms. One distinctive aspect of BlockFi is that US customers can access their services without any troubles. Also, the platform allows wire transfers that convert fiat money to stablecoin at 1-to-1 ratio.
Unchained Capital offers custody, as well as crypto loan services. The platform accepts borrowers from the United States, as well as other parts of the world. The minimum amount for international clients is $100,000, which makes it a suitable choice only for those interested in large loans.
Overall, the company does not offer competitive conditions compared to other players out there. The interest rates start at 9% APR up to 14% APR and the term of the loan can go from 3 months to 3 years.
In a similar fashion than Nexo, YouHodler allows you to borrow and earn interest. A great thing about YouHolder is that you can benefit from a really high loan-to-value ratio that goes up to 90%. YouHodler is compatible with most cryptocurrencies, which makes it a comfortable choice as you wouldn’t need to exchange your altcoins for other currencies to be used as collateral.
Apart from that, YouHodler accepts all the major cards (Visa, Maestro, American Express, MasterCard, etc.) and works with top payment gateways (PayPal, ApplePay, Qiwi, Skrill, etc.). Additionally, you don’t require any credit checks. The simple and intuitive interface of YouHodler makes it easier for users to engage with the platform.
When it comes down to earning interest, you can access a 12% APR. While this platform lets you withdraw your earnings with zero commission to other wallets, it charges you 5% if you wish to cash out straight to a bank card. No need to say, you can easily send your stablecoins to the Crypterium Wallet and then process a low-fee card payout.
Last but not least, CoinLoan — a peer to peer lending marketplace. CoinLoan connects both sides through an easy-to-use and secure platform. Lenders set their conditions (rate, loan currency, term and loan amount), and the system takes care of the rest. At the moment, CoinLoan offers up to 10.3% APR.
A great thing about CoinLoan is the broad variety of cryptocurrencies supported. Borrowers just need to enter the desired amount and term to know the total repayment amount.
The cryptocurrency landscape can be highly risky and unpredictable. Cryptocurrency lending platforms allow you to access cash without selling your crypto. Cash that can be used for life expenses, or amplify your positions. Also, you can use crypto lending to earn a decent passive income with minimum risks. If you are thinking of using crypto lending services, the above-mentioned platforms are totally worth trying.